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jane murray

Election to Burn Credit Balance

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For a 12/31/2019 valuation, can an election by the plan sponsor be made before the end of the plan year (12/31/2019) that states the plan sponsor will burn enough of the prefunding balance so that the 12/31/2019 AFTAP and FTAP will both be at a minimum of 100%?  Or does the election have to state a certain dollar amount that will be burned?

In the case of an end of year valuation, you won't know the end of year liabilities until the following year and then it will be too late to burn a portion of the prefunding balance for the prior year.  If the election must state a certain dollar amount that will be burned, how does everyone handle a situation like this where you want to maintain the AFTAP and FTAP at 100%?

Thanks in advance for the insight.

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On ‎5‎/‎4‎/‎2019 at 12:37 AM, jane murray said:

Or does the election have to state a certain dollar amount that will be burned?

Yes

On ‎5‎/‎4‎/‎2019 at 12:37 AM, jane murray said:

how does everyone handle a situation like this where you want to maintain the AFTAP and FTAP at 100%?

You guess your best.

However, I am missing something here. If your  Assets+Contributions > TL+NC, the AFTAP is over 100%, and you do not subtract credit balances. And if not, waiving the credit balances will not make AFTAP over 100%

And for FTAP, why would you need it to be over 100%? When your FTAP is less than 100% the only consequences are the quarterly contributions, which you can satisfy with credit balances.

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