Assets for year-end valuation

[Guest guppy]

Plan starts in 2004 and first valuation date is 12/31/2004. A contribution was made to the plan during 2004. Normally, you would subtract the "advance" contribution plus interest at the val rate from the year-end market value. But in the first year of a new plan, should you do this or simply set the AVA to $0? If you subtract the contribution, what do you do if you get a negative number?

Ex.

1/1/04 contribution = $10,000

12/31/04 market value = $10,500

Valuation interest rate = 6%

What is the 12/31/04 Actuarial Value of Assets?

What if the 12/31/04 Market Value is $11,000?

[david rigby]

Several prior discussion threads on this topic, most of which contain my opinion that the assets at the first valuation date must be zero. However, since I rarely encounter EOY valuation dates, it's possible that my opinion is all wet.

At any rate, try the Search feature. Likely, all such discussions will be in the DB message board. For example,

http://benefitslink.com/boards/index.php?showtopic=17207