accum funding deficiency on plan termination

[Guest Carol the Writer]

I have a client, a one-life group, who through no fault of her own, had a accum funding deficiency in the year prior to the year of plan termination. Her plan had been a 412(i) plan, which was in the 2004 PY converted to a "traditional" db plan. Last year we had some computer difficulties in getting the actuarial valuation out as a result of this conversion.

Once we fixed that - which was fixed after the Sept 15, 2005 deadline for PYE 12/31/2004, she had an accumulated funding deficiency. Now she is looking to terminate the plan. The plan still has an accumulated funding deficiency. Is it too late to say that she should remedy it by 9/15/2006 for the final PY? Does the exact date of plan termination matter? How do I report this on the final Sched B?

If this is too much free advice to ask for, please let me know. Thanks! Carol Caruthers

P.S. My paper on Theories of Dynamic Actuarial Optimization" was published on BenefitsLink on, I believe, Monday May 15. Any feedback would be welcomed. Thanks!

[AndyH]

Take a look at Revenue Ruling 79-237 which seems to say correct it (the timing is not clear but 9/15 would seem safe), pay the penalty for the one year, and you are done. "Generally" the FSA would not apply after the year of termination so that should be the final B it appears to me.