AFTAP Heaven

[JAY21]

OK, all these rules are starting to blur together.

If I have a new 2007 DB plan and have the data to do the 2007 valuation, I can do the 2007 AFTAP based upon the 2007 EOY valuation data, right ? (I know I can't use 12/31/07 data for 2008 AFTAP pending technical correction bill).

I realize it drops 10% on April 1st, but just want to confirm or correct my thinking on the above.

[AndyH]

Wrong, as I understand it. If you used 12/31/07 data to project to 1/1/07, as some suggest is permissable, you have something that is not 100%. This is unless you have some sort of past service provision.

Somebody please correct me if I a mistaken. This is how it understand it now.

[Penman2006]

Aside from the relief given by Notice 2008-21 the AFTAP is a beginning of year calculation. At least that is my understanding of my readings to date, and threads on this message board seem to support that. If you have a DB plan that grants no past service credit, then at 1/1/07 your liabilibity is zero and your assets are zero. Given that, in my opinion, to consider that this plan is anything other than 100% funded for 2007 doesn't make sense.

[AndyH]

Right. I understand the IRS says it is neither 0% or 100% (which is unhelpful).

[JAY21]

OK, so if I change from an EOY val for 2007 to a BOY val for 2007 can we still use 2007 RPA current liability (at BOY) for the 2007 AFTAP ? (I don't see where there is any other choice but don't know if this is an approved approach or not).

In the particular plan I'm thinking of I doubt the 2008 AFTAP will get done for some time as our actuarial software vendors don't appear to be that far along yet, so I'd like to do a 2007 AFTAP to carry me through much of 2008 until the software can run PPA funding.

[Effen]

mathematicians know that anything divided by zero is "undefined". We just need Congress to define the un-definable and we'll be set.

Hopefully they can get that done while Bush is still president because we all know how the Clintons are with definitions. Then again, I would pay money to hear Bush try to explain the undefinableness of it all.

[AndyH]

I have a bunch of those. I think we're out luck if a 1/1/08 val doesn't get done by 3/31 - a notice must be issued and lump sums restricted until an 08 AFTAP is done or somebody ends the insanity with either more favorable guidance or technical corrections.

One or more people on these Boards said ASPPA is arguing this issue.

p.s. Guess what, next year would be worse. There is no longer automatic approval for a change in val date from 12/31 to 1/1 after 1/1/08, so two val cycles would need to be done by 3/31/09 for a new plan in 2008, instead of using one year of census for two vals (12/31/07 and 1/1/2008).

[AndyH]

mathematicians know that anything divided by zero is "undefined". We just need Congress to define the un-definable and we'll be set.

Hopefully they can get that done while Bush is still president because we all know how the Clintons are with definitions. Then again, I would pay money to hear Bush try to explain the undefinableness of it all.

Problem is, almost no politicians in Washington have a clue what a mess they made.

[JAY21]

AndyH, I started this thread assuming a new plan, but if I switch scenarios to an existing plan wanting to change to BOY val for 2007, are we still stuck in the quagmire on those too ? (i.e., can't use RPA numbers at 1/1/07 for 2007 AFTAP).

[AndyH]

Please clarify. I don't understand the question. An existing plan has a non-non-existent liability percent.

[Mike Preston]

Jay21, no, you are not stuck. You have a BOY valuation as of 1/1/2007 and that makes life easy for you.

[JAY21]

Andy, sorry I was probably trying to stretch the same thread into a "2-fer" (two for one) in changing the facts.

Bottom line like all of you we have some new 2007 plans that are "stuck" and some older (existing) plans that I could change to BOY vals, I think Mike confirmed that on a plan in effective before 2007, changing to a BOY val will bring me back "into the fold" so to speak.

[tuni88]

Question from the peanut gallery:

What's AFTAP and why is it a big deal? (I'll hang up and take my answer off the air.)

[John Feldt ERPA CPC QPA]

AFTAP: "adjusted funding target attainment percentage” http://www.irs.gov/pub/irs-tege/epnf_0807.pdf

mathematicians know that anything divided by zero is "undefined". We just need Congress to define the un-definable and we'll be set.

Hopefully they can get that done while Bush is still president because we all know how the Clintons are with definitions. Then again, I would pay money to hear Bush try to explain the undefinableness of it all.

Except zero divided by zero is anything you want (indeterminate), not undefined.

I want 0 / 0 = 100% - so, uh, well, to prove that we multiply both sides of the equation by zero and we get

0 = 100% x 0

not buying that one I suppose? Alright, - the IRS didn't buy that idea for ADP testing when someone has zero comp.

[tuni88]

[AFTAP: "adjusted funding target attainment percentage”

Thanks John. It seems our calendar year plan's AFTAP will be between 60% and 80%. So what does it mean that "a participant may elect to receive part of the benefit as a prohibited payment (with the remaining amounts only payable in a nonaccelerated form).?"

We offer lump sums so I presume that is an "accelerated" form. Say a non-married employee retires next month with the choice of $500 per month as a single life annuity or $60,000 as a lump sum. Can he get any portion of that lump sum at all? And if so, how much?