Jump to content

Is this a funding assumption change for SB purposes?


Recommended Posts

Hi

A curiosity question.

I am looking at an SB prepared by another actuary for a terminated plan.

It was a calendar plan with val date as of end of year.

SB was prepared with 9/30 year end (term date) which is fine.

When SB was filed, this val date change was filed as a funding assumption change.

Is this correct?

Thank you

Link to comment
Share on other sites

I probably would not have classified that way. 

Plan is terminated, no harm, no foul.

 

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

Link to comment
Share on other sites

In this case the plan year is still the calendar year. The plan year-end date remains the same and all filing and contribution due dates remain unchanged. The valuation date is still 12/31, but the minimum funding requirements are calculated as if it is a short plan year, prorating the normal cost and amortizations. The valuation date could be changed to the beginning of the year, and it is a method change ( rp-17-56.pdf (irs.gov) )

Link to comment
Share on other sites

One small tweak, I don't think you would prorate the normal cost for the short plan year.  The normal cost should reflect the anticipated accrual.  If you used an elapsed time method for accruals, then proration might be appropriate, but if you used 1000 hour rule, the normal cost might be either a full year's accrual, or no accrual.

 

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...