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2. Computations by the Experts
The parties’ experts described the ways that actuaries
interpret the account limit for a reserve provided in section
419A(c)(2) and made computations using variations of the aggregate
and entry age normal cost methods.
a. Mr. Cohen
Mr. Cohen, one of petitioners’ experts, is an expert in
actuarial science and a principal at PricewaterhouseCoopers LLP,
advising clients on various matters involving actuarial, tax,
pension, and postretirement medical issues. He is a fellow of the
Society of Actuaries, an enrolled actuary under ERISA, and a member
of the American Academy of Actuaries. From 1970-86, Mr. Cohen was
employed by the Internal Revenue Service, serving in a variety of
positions, including director of the Employee Plans, Technical and
Actuarial Division.
Mr. Cohen uses the terms “reserve” and “accrued liability”
interchangeably and posits that the reserve for retirees is the
present value of future benefits. In Mr. Cohen’s opinion, the
aggregate cost method is not appropriate for computing the account
limit for a reserve for postretirement benefits because that method
does not directly compute an accrued liability and fails to fully
fund the reserve for an employee upon retirement. In his opinion,
the entry age normal cost method is the appropriate method because
that method allocates the cost over the entire working life of an
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