S404 deduction under PPA for a new Plan

[flosfur]

Just want to make sure I am not missing anything.

Basically, the 404 adds a cusion amount of 50% of the Funding Target (CL @ BOY) to the minimum required contribution.

For a new plan without past service credits, the Funding Target and the cusion amount would be zero and the minimum/maximum would be the same.

This is not in line with the current 150% of CL less Assets limit which is available to new plans.

Has this been addressed by any guidance?

[Mike Preston]

What would you like them so say?

[AndyH]

So a new plan would always have a 110% lump sum restriction at the end of it's first year, right? Unless of course there was strong investment earnings, I mean.

[flosfur]

What would you like them so say?

Remedy it by making the cusion amout equal 50% of (Funding Target plus Target Nomal) with interest to EOY - as is the case now. Because the PPA is effective from 01/01/08 they put in the 150% CL less assets provision for 2006 & 2007 which was available to new plans. So why take it way from 2008 for the first plan year - for new plans, assuming non gain/loss, the deduction in the second & subsequent years goes up to about 150%+ of the first year deduction!

Can you pull some strings to make it happen?

[AndyH]

Yeah, the PresElect gets to rub lots of elbows at the Cabana.

[Andy the Actuary]

How about plan provides flat benefit fully accrued? Limit by 415 and you should have a benefit to value on first day of plan year.