carrots

I think they can be applied on line 35 of the Schedule SB

JAY21 - Yes, I agree with that; but lets try some actual numbers: Quarterlies are $50,000, due 4/15, 7/15, 10/15 and 1/15/09 Single large contribution of $300,000 paid 3/15/09 Amount of 3/15/09 contribution made for 4/15/08 quarterly = $50,000*1.11^(11/12) = $55,019 Discounted value at 1/1/2008 = $50,000/1.06^(3.5/12) = $49,157

See IRC 430(j)(3)(A)

Thanks, flosfur. After looking at proposed reg 1.430(d)-1(f)(7) Example 9, is it possible to project the Hypothetical Account Balance (HAB) and the Contribution Credit (CC) to NRD using the same interest rates that are used to subsequently discount back to the valuation date? Assuming no mortality decrement, that would seem to provide that TNC = CC, and FT =HAB. What restrictions are there on the choice of interest rates in projecting values to NRD?

IRC 430(h)(4): "For purposes of determining any present value - - - - , there shall be taken into account- (A) - - - , (B) any difference in the present value of such future benefit payments resulting from the use of actuarial assumptions, - - - , which are different from those specified in this subsection." For a Cash Balance Plan, with i) the accrued benefit equal to the Hypothetical Account Balance, and ii) 100% probability of the benefit being taken as a lump sum, I want to use actuarial assumptions that result in the TNC being equal to the Contribution Credits, and the FT being equal to the Hypothetical Account Balance. Does IRC 430(h)(4)(B) provide leeway to do that? What do the words that I left out mean: "in determining benefit payments in any such optional form of benefits" - particularly where the benefit is the Hypothetical Account Balance?

A new cash balance plan is effective 1/1/2009 with a contribution credit of 10% of compensation. Is there any problem with providing all participants at 1/1/2009 with an immediate past service benefit of 10% of 2008 compensation? Would this result in the plan having a Funding Target at 1/1/2009, allowing for a range of contributions for 2009?

Can you provide the benefit formula?

Is this a US plan?

For pension actuaries there is a lot of potential in cash balance plans. For non-pension actuaries there are opportunities in life, health, casualty, statistics, etc. For all of us who love just messing around with numbers, it's hard to imagine a better profession! Perhaps "the future ain't what it used to be," but I don't think that "the fat lady" is going to be singing for actuaries any time soon.

A cash balance plan is designed with a small benefit formula. If the company sponsor has a good year, the formula is retroactively increased for that year only. Each year the formula is either left at the original low level, or retroactively increased for that year only. The purpose of the design and methodology is to increase the flexibility of employer contributions to reflect the actual level of business activity. Does this meet IRC regs? If not, why not?

Do we have the 2008 Schedule SB instructions yet? Question 21b, for example, asks for the code for the Applicable month for the Segment rates lookback - October (3 months) in this case. Anyone know the code?

Say, in a BOY valuation for an owner only plan, this has been your regular actuarial assumption; but now the owner wants to terminate without making a further contribution to the plan. With this assumption, you will generate a TNC. Would you need approval to change the assumption to get a $0 TNC? Assuming the owner and spouse are prepared to waive unfunded benefits, is there another way to get a $0 TNC?

For a small plan, can I change the 2008 valuation date from 1/1/2008 (BOY) to 12/31/2008 (EOY) without seeking approval? See 1.430(g)-1

IRC 404(o)(1)(B) allows the deduction of the minimum required contribution under IRC 430. That presumably includes the interest adjustment under IRC 430(j)(2).

Excellent! Thanks for the reference!

For a new plan, even with past service credits, how can we get an FT at BOY? Isn't the AB at BOY = $0, since the 415 $ limit is $0 at BOY? Am I wrong in thinking that the first year 415 $ limit at BOY is equal to the regular limit, multiplied by zero years of participation divided by 10?

Under PPA, once a new plan has been designed, there doesn't appear to be any first year funding flexibility, other than that caused by the timimg of contributions. If using a BOY valuation date, the FT is $0 (415 $ limit, with no YOP). So, the cushion amount is $0. So, the maximum contribution is equal to the minimum contribution (TNC), as adjusted for date of payment. Comments, please! For example, would it help to switch to EOY valuations?

Under PPA, once a new plan has been designed, there doesn't appear to be any first year funding flexibility, other than that caused by the timimg of contributions. If using a BOY valuation date, the FT is $0 (415 $ limit, with no YOP). So, the cushion amount is $0. So, the maximum contribution is equal to the minimum contribution (TNC), as adjusted for date of payment. Comments, please! For example, would it help to switch to EOY valuations?

Can small plans use unisex mortality under IRC 430(h)(3)? The regs, at 1.430(h)(3)-1(b)(2), only seem to allow small plans to use combined tables for annuitants and nonannuitants; the regs don't seem to say anything about combining the male and female tables. Although, in the Explanation of Provisions, the IRS states, "These regulations provide an option for smaller plans that choose to use static mortality tables to use a single table for all participants - in lieu of the separate tables for annuitants and nonannuitants - in order to simplify the actuarial valuation for these plans." Clearly, the male and female tables are combined under 417(e)(3); but, what about 430(h)(3)?