new DB plan funding

[Guest basilb]

I have kind of an unusual situation. We have to set up a new cash balance DB plan by the end of the year under our union bargaining agreements, effective as of the beginning of the year. I understand that generally, the first contribution that would be required under the minimum funding requirement is 8 1/2 months after the end of the plan year. We are setting up our plan to have a short plan year from 1/1 to 6/30, and then 7/1-6/30 plan years after that. So, even though we don't have a plan document finalized yet, we have already had a plan year end and an actuarial valuation showing 0 assets! When do the contributions requirements kick in? 8 1/2 months after 6/30? Or do we have to start putting in quarterly contributions as of Oct 15th since we aren't fully funded for the short plan year? I am having trouble finding any guidance on how to start up brand new plans.

[tymesup]

I think you needed to adopt the plan before the end of the short plan year ending 6/30/07. Perhaps there is a Resolution to adopt a plan that you haven't seen yet.

If the plan does have a short plan year ending 6/30/07, you would be exempt from quarterly contributions for that year. Therefore, your minimum funding is due 8 1/2 months after the plan year end, or 3/15/08.

[ak2ary]

Resolution to adopt a plan doesn't work... the plan itself must be adopted by the last day of 1st plan year

[Mike Preston]

Well, let's get technical for a moment. I agree that a resolution probably won't work. But, if the resolution itself has enough meat in it so that a participant's benefit entitlement can be established, then it would suffice. For example, if the resolution was of the form that "the attached plan shall be adopted....." and then the actual adoption of the plan was somehow delayed, I'd fight that fight.

[ak2ary]

Mike, I absolutely agree..I was commenting on the concept of the board approving the general adoption of a plan