2009 Instructions For Schedule Mb (Form 5500) Multiemployer Defined Benefit Plan And Certain Money Purchase Plan Actuarial Information (Page 3 of 6) in pdf

the plan’s status, without regard to the WRERA election. (An

ruling letter in line 5n. Note that the plan sponsor’s agreement

election under section 204 of WRERA cannot be made for a

to a change in funding method (made pursuant to Rev. Proc.

plan year beginning during the period October 1, 2009, to

2000-40, PPA section 201(b), or a class ruling letter) should be

December 31, 2009.) The instructions for the Schedule R (Form

reported on line 8 of Schedule R (Form 5500).

5500), Part V, describe additional information to be provided

Shortfall Method: Only certain plans may elect the shortfall

with respect to a WRERA election.

funding method (see Treasury Regulations section

If the plan is certified to be in endangered status, seriously

1.412(c)(1)-2). Advance approval from the IRS for the election

endangered status, or critical status, attach a copy of the

of the shortfall method of funding is NOT required if it is first

actuarial certification of such status to this Schedule MB. Also

adopted for the first plan year to which Code section 412

attach an illustration showing the details providing support for

applies. In addition, pursuant to PPA section 201(b), a plan

the actuarial certification of status and label the illustration

does NOT need advance approval from the IRS to adopt or

“Schedule MB, line 4a – Illustration Supporting Actuarial

cease using the shortfall method if the plan (1) has not adopted

Certification of Status.” For example, if a plan is certified to

or ceased using the shortfall method during the 5-year period

be in critical status based on Code section 432(b)(2)(B), show

ending on the day before the date the plan is to use the

the funded percentage (if applicable) and the projection of the

method, and (2) is not operating under an amortization period

funding standard account to the year where the accumulated

extension and did not operate under such an extension during

funding deficiency occurs.

such 5-year period. In such a case, check “Yes” for line 5m. If a

plan utilizes this automatic approval to apply the shortfall

Line 4c. If, in the plan year in which the Schedule MB is filed,

method, the benefit increase limitations of Code section

a certification was required to be made under Code section

412(c)(7) apply.

432(b(3)(A)(ii) and ERISA section 305(B)(A)(ii) with respect to

scheduled progress during the plan year for which the Schedule

If a plan is not eligible for automatic approval as set forth in

MB is filed, check “Yes” or “No” to reflect the certification.

the preceding paragraph, advance approval from the IRS is

Attach documentation comparing the current status of the plan

required if the shortfall funding method is adopted at a later

to the scheduled progress under the applicable funding

time, if a specific computation method is changed, or if the

improvement or rehabilitation plan to this Schedule MB. Label

shortfall method is discontinued. In such a case there is no

the documentation “Schedule MB, line 4c – Documentation

automatic limitation on benefit increases.

Regarding Progress Under Funding Improvement or

Reorganization Status: Attach an explanation of the basis for

Rehabilitation Plan.”

the determination that the plan is in reorganization for this plan

Lines 4d and 4e. If Code C (Critical Status) was entered on

year and label the explanation “Schedule MB, line 5 –

line 4a, an entry on line 4d is required. For purposes of lines 4d

Reorganization Status Explanation.” Also, attach a

and 4e, in determining whether adjustable benefits have been

worksheet showing for this plan year:

reduced, only adjustable benefits that would otherwise be

1. The amounts considered contributed by employers,

protected under Code section 411(d)(6) and ERISA section

2. Any amount waived by the IRS,

204(g) are taken into account regardless of whether an election

3. The development of the minimum contribution

under section 204 of WRERA has been made.

requirement (taking into account the applicable overburden

Note. If a plan is certified to be in critical status but, as a result

credit, cash-flow amount, contribution bases and limitation on

of an election under section 204 of WRERA, the plan is treated

required increases on the rate of employer contributions, and

as not being in critical status, benefits that are protected under

any adjustments in accrued benefits), and

Code section 411(d)(6) and ERISA section 204(g) are not

4. The resulting accumulated funding deficiency, if any,

permitted to be reduced.

which is to be reported on line 9n. (See Code sections 418B,

418C, and 418D.)

Line 5. Actuarial Cost Method. Enter the primary method

used. If the plan uses one actuarial cost method in one year as

Label the worksheet “Schedule MB, line 5 – Reorganization

the basis of establishing an accrued liability for use under the

Status Worksheet.”

frozen initial liability method in subsequent years, answer as if

Line 6. Actuarial Assumptions. If gender-based assumptions

the frozen initial liability method was used in all years. The

are used in developing plan costs, enter those rates where

projected unit credit method is included in the “Accrued benefit

appropriate in line 6. Note that requests for gender-based cost

(unit credit)” category of line 5c. If a method other than a

information do not suggest that gender-based benefits are

method listed on lines 5a through 5g is used, check the box for

legal. If unisex tables are used, enter the values in both “Male”

line 5j and specify the method. For example, if a modified

and “Female” lines. Check “N/A” for line 6b if the question is not

individual level premium method for which actuarial gains and

applicable.

losses are spread as a part of future normal cost is used, check

the box for 5j and describe the cost method.

Attach a statement of actuarial assumptions (if not fully

described by line 6) and actuarial methods used to calculate the

Check the appropriate box for the underlying actuarial cost

figures shown in lines 1 and 9 (if not fully described by line 5),

method used as the basis for this plan year’s funding standard

and label the statement “Schedule MB, line 6 – Statement of

account computation. If box 5h is checked, enter the period of

Actuarial Assumptions/Methods.” The statement must

use of the shortfall method in line 5k. For this purpose, enter the

describe all actuarial assumptions used to determine the

calendar year (YY) which includes the first day of the plan year

liabilities. For example, the statement for non-traditional plans

in which the shortfall method was first used. For plans in

(e.g., cash balance plans) must include the assumptions used

reorganization status, check the appropriate box for the

to convert balances to annuities.

underlying actuarial cost method used to determine charges

and credits to the funding standard account and check the box

Also attach a summary of the principal eligibility and benefit

for 5i.

provisions on which the valuation was based, including the

Changes in funding methods include changes in actuarial

status of the plan (e.g., eligibility frozen, service/pay frozen,

cost method, changes in asset valuation method, and changes

benefits frozen), optional forms of benefits, special plan

in the valuation date of plan costs and liabilities or of plan

provisions, including those that apply only to a subgroup of

assets. Changes in the funding method of a plan include not

employees (e.g., those with imputed service), supplemental

only changes to the overall funding method used by the plan,

benefits, an identification of benefits not included in the

but also changes to each specific method of computation used

valuation (e.g., shutdown benefits), a description of any

in applying the overall method. Generally, these changes

significant events that occurred during the year, a summary of

require IRS approval. If the change was made pursuant to Rev.

any changes in principal eligibility or benefit provisions since the

Proc. 2000-40, 2000-2 C.B. 357, check “Yes” for line 5m. If

last valuation, a description (or reasonably representative

approval was granted for this plan by either an individual ruling

sample) of plan early retirement factors, and any change in

letter or a class ruling letter, enter the date of the applicable

actuarial assumptions or cost methods and justifications for any

-47-

Instructions for Schedule MB (Form 5500)

2009 Instructions For Schedule Mb (Form 5500) Multiemployer Defined Benefit Plan And Certain Money Purchase Plan Actuarial Information Page 3

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