Funding Waiver

[Guest John Nelson]

I have a client who may need to apply for a funding waiver for plan year that ended Dec 31, 2003. Client is still looking for ways to come up with money to fund plan, but wants to fully explore waiver option (which would give him more time to fund the contribution). Who's the expert out there? Here are the facts: Plan covers about 15 participants. Funding liability for year in question is $222,000. About 90% of that funding liability is attributable to owner. Employer has never applied for a waiver before. If you have experience with applying for waivers and can take on this project at this late date, please call me. My number is 805-563-5300, ext. 11.

Thanks.

[david rigby]

Do a search of the message boards for "funding waiver" for some other discussion.

A waiver application must be submitted no later than 2-1/2 months after the end of the plan year. IRS has said that deadline is not extendable.

[Blinky the 3-eyed Fish]

Since Pax correctly points out that a waiver is not an option, I wanted to ask if everything has been done to lower the contribution by other means? Some thoughts are changing the asset valuation method, changing the funding method or changing assumptions. Unfortunately you are past the 412©(8) period.

[Guest dsyrett]

Within changing the funding method, if its currently an end of year valuation consider changing to a beginning-of year valuation, particularly if there were large investment losses during the year that are driving the contribution up.

[SoCalActuary]

As an alternative, consider whether the primary participant could actually retire at the NRD. Maybe you have a reasonable assumption for changing assumed retirement age if the plan sponsor cannot afford to retire when scheduled.