Projected Unit Credit plan out of balance

[Guest lisbetf]

I have a takeover plan. It's been frozen since 1998. I am doing the 2002 calendar year val. The prior actuary used the Projected Unit Credit funding method. The plan has a negative unfunded (can you believe it in this day and age?). There are no bases because the plan hit the ERISA FFL last year. This year the FFL is not 0. There is a small credit balance. There is a negative unfunded this year.

Here's the question. If I calculate a Gain/Loss base starting at the negative unfunded from last year, and going to a negative unfunded this year, I am still out of balance. Is this okay or do I have to force it to be in balance?

[david rigby]

Since the IRS is not friendly toward the term "negative unfunded", I would determine this year's expected unfunded by starting with last year's zero unfunded. The expected unfunded can be negative. Then compare to this year's zero unfunded. I would make it balance.

Since last year's unfunded was zero and the contribution was zero, you really don't care what the expected is this year. Just create a base to make it balance.