FSCOB & Quarterlies & AFTAPs

[zimbo]

Let us assume that I have a 2009 quarterly contribution requirement of $200,000 per quarter. Let us also suppose that I have a 2008 remaining FSCOB of $800,000. Let us suppose that on 4/1/2009, the Plan Sponsor elects to use the FSCOB to satisfy the 2009 quarterly requirements.

Assume that our 2008 AFTAP was 95%, so on 4/1/2009 it goes to 85% which means no 436 restrictions. Then on 8/1/2009 we complete the 2009 valuation and determine that the AFTAP is 65%. However if we burn $400,000 of the 2008 FSCOB (which is mandatory) then this AFTAP would increase to exactly 80%. But, we have already elected to use the FSCOB to meet the 2009 quarterlies. What are our choices?

1. Too late to burn any FSCOB for AFTAP purposes, since all $800,000 are already "spoken for" due to our FSCOB election?

2. We burn the balance of the FSCOB remaining as of the date of AFTAP certification which would leave no further FSCOB remaining for the final 2 quarterlies of 2009 but would avoid any 436 benefit restrictions because we our AFTAP for 2009 would increase to 80%?

3. Anything else you can think of?

[Guest KennyH]

Let us assume that I have a 2009 quarterly contribution requirement of $200,000 per quarter. Let us also suppose that I have a 2008 remaining FSCOB of $800,000. Let us suppose that on 4/1/2009, the Plan Sponsor elects to use the FSCOB to satisfy the 2009 quarterly requirements.

Assume that our 2008 AFTAP was 95%, so on 4/1/2009 it goes to 85% which means no 436 restrictions. Then on 8/1/2009 we complete the 2009 valuation and determine that the AFTAP is 65%. However if we burn $400,000 of the 2008 FSCOB (which is mandatory) then this AFTAP would increase to exactly 80%. But, we have already elected to use the FSCOB to meet the 2009 quarterlies. What are our choices?

1. Too late to burn any FSCOB for AFTAP purposes, since all $800,000 are already "spoken for" due to our FSCOB election?

2. We burn the balance of the FSCOB remaining as of the date of AFTAP certification which would leave no further FSCOB remaining for the final 2 quarterlies of 2009 but would avoid any 436 benefit restrictions because we our AFTAP for 2009 would increase to 80%?

3. Anything else you can think of?

Your FSCB is "burned" when you use it for the quarterly so it no longer exists when you do the 2009 val (the FSCB is reduced at the time the election is made). At the moment it appears that the election must be made prior to the qrtly due date, but TC may fix that to an automatic reduction if no qrtly is made.