This is strictly hypothetical.

Actuary B takes over the Widget Company Penison Plan in 2010 on this very morning 1/2/2010. The prior actuary, Actuary A, had timely certified the AFTAP to be 81% in 2008 and again 81% in 2009, and all the numbers look in order. The Pension Plan had distruted full lump sums in both 2008 and 2009 to several employees. Actuary B compares the 1/1/2010 census to census provided by Actuary A. The Plan has an age 65 NRA with full actuarial increase granted for working beyond age 65. No credit balances.

Oy!

Actuary A had reported Mr. Widget has having been born on 1/1/1944 but low an behold, Widget Company HR has now reported Mr. Widget as having been born 1/1/1940. Had we valued Mr. Widget's benefit using the actuarially increased beneft -- at age 68 in 2008 and at age 69 in 2009 -- the AFTAP would have been 79% as of 1/1/2008 and 78% as of 1/1/2009. Benefits would have been restricted.

Any suggestions?

My initial thoughts (other than contacting an attorney) would be to contribute enough now interest adjusted according to the credit balance actual return interest crediting rates to make the Plan have an AFTAP of 80% on 1/1/2008 and 1/1/2009. These contributons would not be counted as excess contributions for 2009. We can't go back and amend the 2008 schedule SB owing to the 8 1/2 month rule. Then, I would face Mecca and pray.

Sounds reasonable ...

Also, is plan admin aware that lumps sums will be restricted as of 4/01/10 unless 2010 AFTAP stays at 80+% and is certified by 3/31/10?

I'm curious about how concerned (about negative employee & customer reactions) employers are. Considering the hugh asset losses, it seems that many plans "stretched" to get the 2009 AFTAP to 80%. When you can't get the 1010 AFTAP above 80%, are they alerting potential retirees (so they can get out before 3/31)? AND should they ?

We all have experienced different employer reactions in this regard. In 2008, many employers contributed extra to get to 80% owing to the perception of asset mismanagement. In 2009, these same employers backed down and let the chips fall where they may having taken advantage of 2008 where most got schmeized on their investments.

IMHO, the corrected DOB produces an experience loss, at 1/1/2010. No impact on 2009. No impact on 2009 AFTAP and/or distributions. If the sponsor does not want any restrictions to apply at 4/1/2010, a 2010 AFTAP prior to the date is needed, which would seem to require an accrued contribution at 12/31/2009, assuming the hypothetical actuary has sufficient time to certify an AFTAP prior to April 1.

Or have I misread something?

In days of old before the wheel and when the IRS was the IRB, your position was a sensible approach. And you could certainly argue it. Now, however, we're in "gotcha" mode and whether or not it would be acceptable (errors do occur) would be an actuarial answer: "It depends."

Maybe put another way... what would actuary A do if he continued with the plan and HR told him the DOB was previously wrong. I would think that if actuary A was "certain" of the prior census (that is, HR "certified" the prior census), then no changes to prior years should have to be made. After all, auditing census that has been "certified" by HR shouldn't be necessary, should it? If adjustments are required, how far back does this go? Even pre-PPA, there were minimum required, maximum deductible issues. Now, if there were data entry errors, illegible handwriting issues, etc, then maybe adjustments would be required. But, as mentioned above, "it depends", I guess...