RPA rates

[Guest saeissler]

Is it okay to use one RPA rate for funding purposes and another for maximum deductible purposes?

[Mike Preston]

Is it okay to use one RPA rate for funding purposes and another for maximum deductible purposes?

I think the answer is yes. Certainly the RPA rate you use for maximum deductible purposes is not reported on the Schedule B and does not impact the RPA amounts disclosed on the B. I'm not sure whether that constitutes what you are referring to as "for funding purposes."

[Guest DBtech]

Is it okay to use one RPA rate for funding purposes and another for maximum deductible purposes?

Yes, as long as the rates are within the 90% to 105% corridor.

[Guest Grant]

Is it okay to use one RPA rate for funding purposes and another for maximum deductible purposes?

Yes, as long as the rates are within the 90% to 105% corridor.

And the latter refers to the treasury basis for 2004 and 2005, not the Corporate Basis. So you could go as low as 4.59% for 1/1/2005 vals for max tax.

[Guest saeissler]

Yes, thanks all. I was preparing the Schedule B and adding the attachments and felt uncomfortable about reporting RPA rates on the schedule B that are different than what I am using for the maximum deduction calculation, even though I know that 412 and 404 are different animals - just wanted a second opinion....

[david rigby]

Perhaps I just can't read, but the 1:31 pm original post is rather generic and the 4:08 pm followup is rather specific. I agree that two rates are permitted if this refers to the PY beginning in 2005. Not if this refers to the PY beginning in 2006.

http://benefitslink.com/boards/index.php?showtopic=31178

[Guest saeissler]

PAX - I am actually doing a 2005 schedule B. The concern that I had was that 404(a)(1)(D) refers back to the current liability under 412(l), which may be because it is just taking us back to the definition and permissible rates for current liability, but also could have been an indication that the current liability rates need to be the same for 404 and 412 purposes for a particular year.

I don't see any difference if my question refers to 2005 or 2006 since the special 2004-2005 rates are in both 404 and 412. But I may easily have missed your point??!

[Guest Steve C]

It could make a great deal of difference.

My view is that CL rates for 404 and 412 were decoupled by the Pension Funding Equity Act. As a result you could select a 404 rate without regard to the rate used for 412, but the treatment applied to only the 2004 and 2005 years.

Now that we're in 2006 (and without an extension of PFEA relief), our 404 and 412 CL rates should again be consistent.

Pax, does that match your understanding? Mike?

[david rigby]

I agree with Steve C. See discussion in the link posted above.

[Guest mingblue]

I agree with Pax & Steve C for 2006 - and it's consistent once again with the 404 regs that always required the assumptions for 404 to be consistent with those used for 412.