Confirming if Quarterlies would be required

[Effen]

Lets say I have a plan that is 95% funded in 2008 and qualifies for the transition rule. Therefore, I have no shortfall amortization charge since I was > 92% funded.

However, I think I still owe quarterlies in 2009 because I had a funding shortfall in 2008, even though I didn't have to amortize any of it.

Agree?

[Guest GAM]

Agreed

[Andy the Actuary]

agreed.

How about this.

Facts 1-1-2008:FT = 2,000,000

Assets=3,000,000

FSCOB=1,000,001

TNC=500,000

FSCOB of $500,000 applied

Facts 1-1-2009:FT=2,200,000

Assets=2,800,000

FSCOB=500,001

TNC=600,000

Since as of 1/1/2008, $1 = FT - (Assets - FSCOB) >0, Quarterlies apply for 2009.

Plan Sponsor may:

(a) Pay quarterlies of 125,000 and 100,000 by 9/15/2010

(b) Burn 500,001 of FSCOB as of 1/1/2009

© Apply 500,001 of FSCOB as of 1/1/2009 and pay 99,999 by 4/15/2009

(d) Apply 125,000 of FSCOB to each of first four quarterly contributions and then pay 100,000 by 9/15/2010

Only (a) does not require an employer election

And is it any wonder that each morning "they" ask me what day it is?

[AndyH]

Lets say I have a plan that is 95% funded in 2008 and qualifies for the transition rule. Therefore, I have no shortfall amortization charge since I was > 92% funded.

However, I think I still owe quarterlies in 2009 because I had a funding shortfall in 2008, even though I didn't have to amortize any of it.

Agree?

Agreed, but if the plan is frozen the quarterly is $0 since you have no normal cost and no amortization. (I should add that this assumes that 2009 is funded at 94% or better or that the freeze was in effect for all of 2008).