CPC CPC Actuarial Concepts & Funding Methods 3

Question 1

Which mortality table is currently mandated for determining minimum funding liabilities for single-employer defined benefit plans?

Accepted Answer

IRS-prescribed mortality tables updated periodically under IRC Section 430(h)(3)

Answer

RP-2000 mortality table

Answer

1983 Group Annuity Mortality Table

Answer

SOA Pri-2012 table without IRS approval

Question 2

What does 'experience gain' mean in the context of actuarial valuations?

Accepted Answer

Actual plan experience more favorable than actuarial assumptions

Answer

Investment returns exceeding the assumed rate

Answer

Additional contributions made above the minimum required

Answer

Increase in plan assets due to new participant contributions

Question 3

A plan uses a 7% investment return assumption. If actual returns average 5% over 5 years, the resulting actuarial loss is reflected how?

Accepted Answer

Amortized over future years as part of actuarial gains/losses or immediately under certain methods

Answer

Immediately as a one-time contribution surcharge

Answer

Ignored if plan assets exceed 80% of funding target

Answer

Charged entirely to current-year plan expenses

Question 4

What is the 'target normal cost' used in minimum funding calculations under IRC Section 430?

Accepted Answer

The normal cost under the plan's actuarial cost method minus the expected plan expenses for the year

Answer

The present value of all vested benefits

Answer

The sum of all participant account balances

Answer

The plan's normal cost increased by the shortfall amortization charge

Question 5

Under the Frozen Initial Liability (FIL) actuarial cost method, how are actuarial gains and losses treated?

Accepted Answer

They adjust the normal cost for future years but do not create separate amortization bases

Answer

They are recognized immediately in the year they occur

Answer

They are amortized separately over 15 years

Answer

They are allocated entirely to past service liability

Question 6

A plan's funding target for the current year is $10 million and plan assets are $8 million. What is the funding shortfall?

Accepted Answer

$2 million

Answer

$0 (no shortfall if assets exceed 75% of target)

Answer

$1 million

Answer

$10 million