2008 AFTAP - Sequence of Events

[Guest merlin]

2008 AFTAP = 61.5%

COB > 1,000,000

Amount of COB necessary to bring AFTAP to 80% = 850,000

What is the sequence of events? Must I go the long way:

Certify AFTAP=61.5%

Provide notice of restriction

Get client to elect to burn COB

Recertify new AFTAP = 80%

Rescind notice of restriction?

Or can I just go to the end result:

Burn COB as mandated (is the client election still needed?)

Certify AFTAP = 80%

[ak2ary]

I assume the plan has accelerated payment options or else there would be no need for the notice...but in that case the reduction of credit balance is MANDATORY and automatic to get to 80% so the restriction never applied

[Andy the Actuary]

I assume the plan has accelerated payment options or else there would be no need for the notice...but in that case the reduction of credit balance is MANDATORY and automatic to get to 80% so the restriction never applied

But, you would still have to certify the AFTAP, else the default applies. I yet to see stituations that can be resolved strictly by burning credit balance. Thus, it was elective to burn the credit balance. So, it took additional 2007 contributions in addition to burning the credit balance to get to 80%. I had the client elect to burn the credit balance and agree to make additional contributions on the same form before I issued the AFTAP certification.

[Guest merlin]

Andy,

I'm with you on the idea that most clients don't have enough of a balance to avoid the restriction by using the balance alone. But most of my clients don't have balances of $1M. These guys do.