Dinosaur

At this time, has the funding shortfall has been defined for pre-effective years for purposes of determining whether or not quarterlies apply for the first effectve year? This provision was "reserved" in the 4/11/2008 proprosed regulations. Have you seen anything in print that supports that the 2007 credit balance would need to be subtracted for this purpose? Andy No, I haven't. I guess I assumed it would be subtracted. I should remember not to assume anything. Has anyone else seen anything? But just assume that the quarterlies did apply for 2008, any ideas on my question?

I need help with the use of carryover balance for quarterly contributions. My example is as follows: Minimum contribution as of 1/1/2008 is $9,039 (also maximum contribution). Carryover balance of $136,219 as of 1/1/2008. Actuarial Value of Assets are $285,780 as of 1/1/2008. Quarterly contributions are required for 2008 since there is a funding shortfall for 2007 (Curr Liability (1/1/07) - ((AV assets 1/1/07 - credit balance 1/1/07))) > $0. The AV assets was 241,088, CL 1/1/07 is 172,064 and credit balance is 116,030. Assets are greater than CL 1/1/2007 but due to the credit balance there is a funding shortfall, no exceptions???. The client made a contribution of $9,058 on 12/26/2008 and $520 on 1/13/2009. Effective interest rate is 6.03%. We originally calculated the amount to deposit adjusted with interest ignoring the interest on late quarterly contributions. The client can elect to reduce the carryover balance as of 1/1/2008 and apply towards the minimum contribution to reduce the cash required. Can the client elect to use $9,039 of the carryover balance as of 1/1/2008 to reduce the amount of the cash required to $0? If so, and using the above deposits are we all set for 2008? Isn't the amount of the interest on late quarterly contributions based on the minimum required contribution (prior to election by plan sponsor)? What am I missing? Or can the carryover balance be used to satisfy each quarterly contribution? How does that work?

Thanks Effen. I was hoping it would be easier than that. So I guess there is no easy way to calculate the liabilities for yield curve. Are many people using the yield curve? Or, are you generating your own program on EXCEL or are there valuation systems out there that can handle these calculations?

I got those rates from our CCH book (IRS Spot Segment Rates). These are derived from the rates you referenced. What actual rates (if using the yield curve) would you use for a 11/1/2008 valuation?

If we elect to use the yield curve for a November 1, 2008 valuation (using the valuation month), are the rates 7.11%, 8.23% and 7.42%? These rates would definitely lower the Funding Target. Are these rates used for all purposes of the valuation calculations (i.e. AFTAP, benefit restrictions under Section 436, PBGC). How long are we stuck with using the yield curve (versus the segment rates)? When does the plan sponsor have to make this election to use the yield curve. Any other comments?