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Is this a funding assumption change for SB purposes?


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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

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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.

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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) )

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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.

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