Excel Spreadsheet

[Andy the Actuary]

Has anyone assembled a spreadsheet for determining minimum contribution requirements under 430 (incorporating use of credit balances) and including all of the trigger percentages they would be willing to share? In particular, there exists the cart-horse proposition of knowing what your client is thinking of contributing before you determine whether or not to use the FSCB (old carry over). Here is the minimum if you want to make the bare minimum contribution; here is the minimum if your planning to make more than the bare minimum contribution.

E.g., FSCB=3,000, TNC+Amortization=2,000. Bare minimum = $0 but client contributes $2,000. If quote bare minimum, we end up with FSCB=1,000 and PFB=2,000. Whereas if we don't use FSCB, we end up with FSCB=$3,000 and PFB=0, which is more desirable.

[Mike Preston]

Since one can use the FSCB for any purpose and the PFB only for specific purposes, it seems to me that it is always better to have a bigger FSCB and a smaller PFB. BTW, I don't necessarily agree with your numbers because I haven't looked specifically at what creates a PFB in the absence of a contribution. I'm guessing that if I understand what your sequence of events is, you really have a $1,000 FSCB and a zero PFB. But I may just not be understanding.

[SoCalActuary]

Get a copy of the proposed 2008 Schedule SB.

Item 35 will allow the plan sponsor to designate an amount from either the COB or PFB to satisfy the current year contribution requirement. You could elect to use the COB for your $2,000 cost, and you would then see the $2,000 contribution used to increase the PFB. This is documented in items 36-40 for the current year.

Then in item 8 of the next year, any elected amounts in 35 will be used to reduce the credit balance.

But in your fact pattern, no election is needed, since the contribution is sufficient to meet the current minimum required contribution. So you end up with $3,000 COB, adjusted for interest.

Now, I have not studied this PROPOSED new form and the instructions in depth, but this interpretation makes the most sense to me.

[Andy the Actuary]

Thank you for comments, in particular with Sch B.