This question concerns a plan that is covered under Title I of ERISA but is not qualified under 401(a). Prior to 2008 a funding deficiency existed but funding waivers were never requested since the plan is not subject to the penalties applied to underfunded 401(a) qualified plans. The question is, does the funding deficiency still exist at 1/1/2008, or does it go away along with the FSA? PPA seems to have only contemplated credit balances in this situation, not funding deficiencies. Thanks for any thoughts.

If you're interested, here is the response from Jim Holland regarding 401(a) qualified plans:

"You need to look at our proposed regs issued in April. The deficiency does not carry over to section 430 (and the assets as of 1-1-2008 are not adjusted for the deficiency) but you still have an unpaid contribution for section 4971. Thus, any contribution made will count first for the unpaid amount for 2007 before being counted for 2008.

Note that comments received have taken issue with this seeming "double counting" and "double funding" approach.

Jim"