Valaution & Sch B for the Year of Plan Termination

[flosfur]

Consider a Calendar Year Plan with EOY valuation.

Plan is terminated Aug 15, 2003 say and plan assets distributed by October 31, 2003. Therefore, on 12/31/2003, the plan has no assets or participants.

For the PY 2003, how does one perform a valuation @ 12/31/03 and prepare a Sch B?

P.S . This is purely a Val & Sch B question so let's not worry about proper notices to the participants, vesting, PBGC etc issues.

[Blinky the 3-eyed Fish]

This question has been asked before if you want to search for it and some people gave opinions different from mine.

My take on the matter is that it is not a 12/31 valuation date, but rather an end-of-the-year valuation date. Thus, your valuation date in this case is 10/31/03. In these cases, I have valued the plan the instant before the distributions to avoid showing no assets and minimal or no liabilities on the Sch B. Sometimes there are required contributions in this case, which means that it may work out that a subsequent contribution is made to the trust and distributed out after 10/31. This of course means the actual plan year end is after 10/31. There is no good solution in this case, because if you now do the valuation at the actual plan year-end then you have a whole circular calculation going, so I stick with the 10/31 calculations.

Now in your case, you must be confident that no contribution is due, since you state that the plan year completed 10/31 and you haven't even run the valuation yet. If the plan is that fully funded, you may want to consider a change to a BOY valuation date according to Rev. Proc. 2000-40.

All this complexity of course means that I try to anticipate these situations and switch to a BOY valuation the year before the year of termination. Of course, this isn't always possible.