Alfred E. Gallade - Page 16

                                       - 16 -                                         
               liabilities or determinations of costs of providing                    
               pension benefits under the plan and were made by a                     
               person competent to make such determinations in                        
               accordance with reasonable assumptions as to mortality,                
               interest, etc., and correct procedures relating to the                 
               method of funding.  For example, a trust has                           
               accumulated assets of $1,000,000 at the time of                        
               liquidation, determined by acceptable actuarial                        
               procedures using reasonable assumptions as to interest,                
               mortality, etc., as being necessary to provide the                     
               benefits in accordance with the provisions of the plan.                
               Upon such liquidation it is found that $950,000 will                   
               satisfy all of the liabilities under the plan.  The                    
               surplus of $50,000 arises, therefore, because of the                   
               difference between the amounts actuarially determined                  
               and the amounts actually required to satisfy the                       
               liabilities.  This $50,000, therefore, is the amount                   
               which may be returned to the employer as the result of                 
               an erroneous actuarial computation.  If, however, the                  
               surplus of $50,000 had been accumulated as a result of                 
               a change in the benefit provisions or in the                           
               eligibility requirements of the plan, the $50,000 could                
               not revert to the employer because such surplus would                  
               not be the result of an erroneous actuarial                            
               computation.  [Emphasis added.]                                        
               “Actuarial errors” refer to clerical or mathematical                   
          mistakes regarding actuarial assumptions and methods in                     
          determining the future costs and liabilities required to meet a             
          plan’s funding.  See Holland v. Valhi Inc., 22 F.3d 968, 972                
          (10th Cir. 1994).  Petitioner argues that his 1984 decision to              
          assign his benefits to GCI was tantamount to actuarial error.  We           
               The amount of petitioner’s benefits which he attempted to              
          assign was part of the benefits which actuarial assumptions                 
          addressed since the Plan’s inception.  In accordance with the               
          example in section 1.401-2(b)(1), Income Tax Regs., upon                    
          liquidation of the Plan, there were sufficient assets to meet the           

Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011