PPA Deduction Limit

[Guest Aliactuary]

Does anyone know if the enhanced PPA DB deduction limt for 2006 and 2007 (150% of CL less assets) overrides the old FFL?

[Mike Preston]

In what sense? If you are talking about the credit to the funding standard account, no, I think you still get that (silly as that may seem). It is unlikely, but I guess not impossible to have a situation where it applies in this manner. If you are talking about establishing a maximum deductible contribution, yes.

[SoCalActuary]

Assuming you have not "tainted" the plan with one penny of DC money, I believe you now get the greater of the existing limits under 404 and the new limits on 150% CL - assets.

[Draper55]

PPA amended 404(a)(1)(D)(i) which trumps 404(a)(1)(A)(iii), so the answer is yes.

[Guest Howie Simon]

It appears to me that the new 150% limit under PPA, for 2006 and 2007, only replaces the UCL ( unfunded current liability ) component of the Section 404 maxtax calc for db plans. Indeed, nc+la and FFL are still in the mix unchanged.

Another question is, based on recently released N 2007-28, is it a beginning of year calc now, or end of year calc? I believe the 404 super max based on UCL, prior to PPA, was most commonly determined using an eoy calc.

If all of a sudden it is really a boy calc, then the section 404 UCL determinations historically may have been determined incorrectly. Of course, we didn't have published guidance for the determination of FFL for 404 or 412 before anyway. Is the Notice going to be rewritten?

[david rigby]

Is the Notice going to be rewritten?

Not much chance of that!

[Blinky the 3-eyed Fish]

Another question is, based on recently released N 2007-28, is it a beginning of year calc now, or end of year calc? I believe the 404 super max based on UCL, prior to PPA, was most commonly determined using an eoy calc.

If all of a sudden it is really a boy calc, then the section 404 UCL determinations historically may have been determined incorrectly. Of course, we didn't have published guidance for the determination of FFL for 404 or 412 before anyway. Is the Notice going to be rewritten?

Q&A-4 didn't surprise me as I never took it to be an end-of-year calc, but rather a calculation at the valuation date and rolled forward to the earlier of the end of the applicable tax year or plan year (a typical 404 calculation). Are you saying if it was a BOY valuation date, you considered compensation and census changes, a true EOY calc?

[Guest Howie Simon]

Another question is, based on recently released N 2007-28, is it a beginning of year calc now, or end of year calc? I believe the 404 super max based on UCL, prior to PPA, was most commonly determined using an eoy calc.

If all of a sudden it is really a boy calc, then the section 404 UCL determinations historically may have been determined incorrectly. Of course, we didn't have published guidance for the determination of FFL for 404 or 412 before anyway. Is the Notice going to be rewritten?

Q&A-4 didn't surprise me as I never took it to be an end-of-year calc, but rather a calculation at the valuation date and rolled forward to the earlier of the end of the applicable tax year or plan year (a typical 404 calculation). Are you saying if it was a BOY valuation date, you considered compensation and census changes, a true EOY calc?

no, not a ture end-of-year calc. roll forward from boy valuation. The Notice however doesn't appear to allow for boy normal cost to be rolled forward. That's the part I am nervous about, it just says interest.

[Blinky the 3-eyed Fish]

Ah, I see your point. That is truly poorly written.

[Guest Howie Simon]

Ah, I see your point. That is truly poorly written.

at least we have the gray book, which clearly allowed for the normal cost rolled to the end of year.