FIL method, UAL < 0, No FFC, RP 2000-40

[Effen]

I'm using an FIL method and my UAL is negative and I'm not in Full Funding. Sec. 4.01(2) of RP 2000-40 grants automatic approval if I want to re-establish my UAL.

Q1: If I do this, it looks like the re-established base should be amortized over 10 years. Do you all agree?

Q2: If the Plan was amended this year to increase benefits, any reason why I can't re-establish my UAL recognizing the amendment or should I create two bases. One, my re-established base and two, my recent amendment. I guess the two base approach would give me a lower min since the amendment is 30 years and the re-established base is 10 (I think).

[david rigby]

1. That is the way I read Rev. Proc. 2000-40.

2. In Q&A 90-15 from the Gray Book, the IRS said there is no guidance, but reasonable procedures would likely not cause any problems. Can’t recall any specifics since then. You may also want to review Q&A 97-4 and 2001-18. If i were doing this, my procedure would be to reflect changes chronologically, if possible. Thus, if the plan had been amended 2 months before the val date, then that comes first (but I might have some flexibility on that).

Caution: don’t forget to review the restrictions in Section 6 of the Rev. Proc.