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Suppose a Standing Election was signed by plan sponsor in 2016 that includes language that the plan will use the COB/PFB to apply towards the minimum required contribution in order to avoid an unpaid required contribution.  The 2018 minimum required contribution is 100k and the plan has a 150k prefunding balance.  The prior year use balance percentage is over 80%.

Can the prefunding balance be used to satisfy the 2018 minimum contribution relying on the standing election that's in place?  Or does a new election need to be signed that specifically states the amount of the prefunding balance that will be used to satisfy the minimum for the year?

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If properly drafted, the Standing Election should be sufficient to preclude any need for a new election.

Our Standing Election forms say, in part:

"The Plan Sponsor is hereby providing a Standing Election to the plan’s Enrolled Actuary ..........  to apply all or a portion of the plan’s funding balances to offset the minimum required contribution for any plan year under Code section 430(a), to the extent needed to avoid an unpaid minimum required contribution ..........  "

Such an election would apply exactly 100k of the prefunding balance in your example.

 

......   Jeff

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