Different meanings of FTAP

[Guest Mike Melnick]

The new annual funding notice requires a statement that FTAP is at least 100%, or the actual percentage if less.

Suppose there is no need to subtract the carryover or prefunding balance for purposes of measuring the AFTAP, because the FTAP (before reducing the assets) is at least 100% (per 436(j)(3)). Suppose also that after reducing the assets by the balances, the FTAP is only 95%

What is the FTAP for purposes of the funding notice? It appears that the 436(j)(3) exception only applies for the purposes of measuring the AFTAP, so the funding notice would have to disclose 95%.

The client would like to be able to tell participants that the plan is 100% funded, and the question is, do they have to burn some of their carryover balance to accomplish that?