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Showing results for tags 'aftap'.
Found 4 results
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Wondering, anyone seeing (or acting on) situations where the 1/1/2020 funded ratio is "high" (90% or above) and the plan sponsor is instructing the actuary not to issue the 2020 AFTAP certification, thus letting the default percentages apply? Could be useful when (1) the plan allows lump sums greater than $5,000 and (2) the sponsor is trying to save cash in the plan very soon after the assets have taken a dive. Any other thoughts on the process? the communication? etc? -
I've managed to confuse myself on an AFTAP/deemed burn issue. Plan Year = Calendar Year Prior Year AFTAP > 100% because assets exceed funding target, so prefunding balance does not have to be subtracted from assets for AFTAP (but not FTAP) purposes. Current Year AFTAP not certified by 4/1, so presumed AFTAP becomes last year's AFTAP minus 10%. Presumed AFTAP is over 90%. No deemed burn applies at this point. Valuation is run in May. Current year assets are less than funding target, so prefunding balance must be deducted from assets in AFTAP calculation, resulting in an AFTAP of slightly less than 80%. Restrictions would apply, and there is enough prefunding balance so that a burn can bring AFTAP up to 80%. Is there a required burn triggered by the actual valuation results here? I'm thinking the answer is yes, but I haven't seen this happen in this way many times before. Insights appreciated.
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If a DBP is amended to provide for a benefit formula that would require the plan to pass nondiscrimination testing under IRC 401(a)(4), but that amendment is treated as if it were never adopted pursuant to Treasury Regulation Section 1.436-1(a)(4)(iv) because an AFTAP restriction under IRC 436© is in effect for the plan year that the amendment would have been effective, then is the DBP still subject to the nondiscrimination testing for the plan years that the restriction is in effect? 1. AFTAP for DBP not certified. 2. DBP treated as frozen due to presumption AFTAP less than 60%. 3. DBP amended to change benefit formula but cannot take effect during plan year because of IRC 436© restriction. 4. Plan amendment treated as never adopted. Is the amendment treated as never adopted solely for purposes of benefit accruals, such that the DBP still must pass nondiscrimination testing as if the change in the benefit accruals had been made (but for the treatment of the plan amendment as never adopted), or is the amendment treated as never adopted for all compliance and nondiscrimination testing purposes? A citation to the official authority would be very much appreciated! -
Is the increase in the 401(a)(17) compensation limit considered to be a plan amendment increasing benefits as restricted by 436 for an underfunded DB plan and therefore cannot be used to calculate benefits, or is it only considered as such an amendment as applied to the 415 limit?
