Additional Funding Charge for a Plan first Subject to ERISA in 2003

[Rolf Trautmann]

A governmental entity switched to non-profit in 2003 subjecting their Plan to ERISA.

Most likely the Plan can't be excluded from the Additional Funding Charge due to the "0 participants in prior plan year exclusion" just because it was not then subject to ERISA (it actually had 400 participants in the prior year). However, can the Plan's Funded Current Liability Percentage be determined for the prior 2 plan years and then apply the Volatility Rule? Any help on this would be appreciated.

[Mike Preston]

I don't think there is any guidance on this. The closest I could get was Q&A 2 of the 1999 Grey Book. Maybe somebody else knows of something more on point. Nonetheless, that Q&A basically said if there is no guidance, do something reasonable. What you have suggested seems quite reasonable to me. That, and $4.95 will get you a Frappucino at some Starbucks.

[Guest Roman]

Mike,

You are overstating your value (again).

[Mike Preston]

OK, maybe $5.95 in Houston.

[david rigby]

Good question Rolf. Perhaps you can submit (now) for the 2004 Gray Book.