In small plans it is going to be impossible to do an AFTAP cert for PY xx by 10/01/xx considering that we (at least I) don't even start working on PY xx val till well into the year xx+1 regardless of BOY or EOY val date!

Is there any rumor of postponing the cert date by the congress or IRS to the date when Sch B is required to be filed or some other relief?

I believe there is a range certification that offers some relief though some jeopardy exists if the call is close.

Nope.. not a chance

Why do you wait til year x+1 to do your beginning of year vals?

I would change that practice

For EOY vals, hopefully tech corrections will pass and IRS will get the authority to make the rules workable, then you will get to base the 2008 AFTAP on the 2007 val

Yo, Jamaica Boy, you mean we can't right now? (Good-faith and all that jazz....)

From your comment I can only presume either you are not in the small plan industry and especially Sole Props & Partnerships or your small plan sponsors are clairvoyants and know their business profits for the year well ahead of the year-end.

Actually I have done thousands upon thousands of small plan valuations over the last 25 years and all of them are either end of year valuations or, if they are beginning of year valuations, they are based on prior year pay (or a projection of prior year pay. This is because the reasonable funding method regulations make it illegal to recognize experience after the valuation date. So you are not allowed to recognize the actual earnings for the current year in a beginning of year valuation. I know alot of actuaries do it, but the IRS is on record over and over saying you can't.

What I don't understand is why do a beginning of year valuation wrong when you can do an end of year valuation right?

I don't know it being illegal!? Unreasonable, yes, but illegal?

I am not fond of BOY vals for small plans and have never initiated one myself. But I have taken over many cases with BOY vals where the only this BOY were the value of assets. In many cases even the employees who terminated after BOY were treated as terminated!

Following your appraoch, what do you do when BOY val produces a cost and the client goes ahead and makes the contributions before the year-end but client's Sch C/K-1 comes out to be less than the amount contributed and he cannot deduct all or part of the amount contributed!? Not many clients would be hapy with the outcome.

Thats why I do EOY vals and one of the reasons I dont understand beginning of the year vals


Illegal is too strong a word but the val is invalid if it recognizes experience after the val date

The IRS has looked the other way in alot of cases, but not where the plan is underfunded and the val recognizes a pay decrease after the val date......

Going forward I think the rules are a little stricter, certainly in 2009

Yo, Jamaica Boy, you mean we can't right now? (Good-faith and all that jazz....)

Sorry Mike didnt see this til just now ...musta been da rum

The "No Not a chance " was in response to

]"Is there any rumor of postponing the cert date by the congress or IRS to the date when Sch B is required to be filed or some other relief?"

It wasnt meant to respond to

I believe there is a range certification that offers some relief though some jeopardy exists if the call is close.


Range certifications can be of help and there is talk of allowing a range certification to survive past 10/1...maybe until the following April 1 maybe even til the 5500 is due ...but who knows

What's with the "AFTAP range"? How is that any better than a single "Estimated AFTAP", which would be a single number and not a range?

Does an estimate have to be a range?

To come up with a AFTAP range, one will have to estimate assets, wages etc based on low & high assumptions - i.e. assets growth x% or y%, increases in wages of a% or b% so on. Why not just use one set of assumptions and come up with one estimated AFTAP number?

A range certification is merely a non-precise calculation of the AFTAP. So if you want to do what you are calling an estimated AFTAP, well then the final AFTAP better be within the appropriate range (<60, 60-80, 80+) of that estimated AFTAP.

OR THE PLAN IS DISQUALIFIED.

Doesn't the same go for the range - i.e. the final number better be in th range? What protection does the range provide that a single number does not?

And isn't an estimate also a non-precise calc of whatever one is estimating?

For the application of S436, what's the difference between saying 59% Vs less 60%? Or 79% vs. between 60-80%?

In fact, isn't the range less useful than a single number - <60% could be anything from 0 to 59.9999%, etc? So what comfort does the <60% provide?

And a range protects from that!? And How?

It doesn't, but a "precise" range estimate is, in a word, kind of silly. The only purpose of the range estimate is to state which portions of the law the plan is subject to. Saying 79% doesn't get you anything more than saying 60% to 80-%. If you want to say 79% there is nothing stopping you. But it doesn't get you anything, either, does it?

I don't think we are speaking the same language. If you compute an non-precise number, that by definition that is a range certification. So by example, if you compute the estimated number to be 72%, then you have effectively created a range certification from 60-80%. Your final certification must be within that range or see Mike's comment.

"For the application of S436, what's the difference between saying 59% Vs less 60%? Or 79% vs. between 60-80%?"

Nothing when doing an estimated calculation.