1 ACTUARIAL COST METHODS An employee age 50, started work for an employer at age 30. If the employee is currently earning 60,000, and the benefit formula is 70 percent of final average compensation (in the last year prior to retirement), determine the normal cost and supplemental liability under the entry age normal actuarial cost method. Assume the annuity purchase price is 10.

4 MAXIMUM DEDUCTIBLE CONTRIBUTIONS A plan has assets of 1.5 million, a current liability of 1.2 million, a normal cost of 400,000, a supplemental liability of 2.3 million and an accrued liability of 3.2 million. What is the maximum deductible contribution that can be made for the year?

5 FSA MINIMUM FUNDING REQUIREMENTS Assume that in 1996 a qualified defined pension plan is established with a past service liability of 4 million and a normal cost of 300,000 and the interest rate is 6 percent. It is assumed that all amounts other than interest are charged and credited at the beginning of the year. In the first plan year , the employer contributes 650,000. In 1997, the plan is amended (effective for 1997), increasing past service liability by 500,000. the plan's normal cost for benefits as amended is 200,000. In 1997, there is a net experience loss of 30,000 over the prior year. What is the employer's minimum contribution for 1997? Assume that the plan is not unfunded on a current liability basis