Transition Relief under Technical Corrections

[AndyH]

Is the 92/94/96/98% phase in mandatory, or optional? I keep seeing the words "may" and "available" but I don't think those words are accurate.

If a plan that was not subject to 412(l) in 2007 established an unfunded base for 2008 equal to the unfunded target liability using 100% of target liability, the minimum must now be revised, right?

This seems to be a mandatory change retroactive to 1/1/2008. Is that right?

[david rigby]

Yes. I read it as revising the definition of minimum.

Which section is your focus?

[Andy the Actuary]

My reading was mandatory. If it is not mandatory, then 2008 Schedule SB might need to be revised to indicate whether EA has recognized WERTA.

[AndyH]

I confess I haven't yet read the law, just summaries and the committee report or "Technical Explanation" report. But even ASPPA's webcast yesterday (slide 39) says "The phased-in target is available .........".

I'm probably being picky, but I haven't seen much if any discussion of the extra work this will require. For 4/1/09 AFTAPs, many 1/1/2008 valuations will been to be revised because the COBs will be wrong. This means recalculating 2008 quarterlies and interest charges as well.

[Andy the Actuary]

I confess I haven't yet read the law, just summaries and the committee report or "Technical Explanation" report. But even ASPPA's webcast yesterday (slide 39) says "The phased-in target is available .........".

I'm probably being picky, but I haven't seen much if any discussion of the extra work this will require. For 4/1/09 AFTAPs, many 1/1/2008 valuations will been to be revised because the COBs will be wrong. This means recalculating 2008 quarterlies and interest charges as well.

(b) AMENDMENT TO 1986 CODE.—Subparagraph (B) of section 430©(5) of the Internal Revenue Code of 1986 is amended—

(1) by striking clause (iii) and redesignating clause (iv) as clause (iii); and

(2) by striking clause (i) and inserting the following:

‘‘(i) IN GENERAL.—Except as provided in clause (iii), in the case of plan years beginning after 2007 and before 2011, only the applicable percentage of the funding target shall be taken into account under paragraph (3)(A) in determining the funding shortfall for purposes of paragraph (3)(A) and subparagraph (A).’’.

© EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall apply as if included in the enactment of sections 102 and 112, respectively, of the Pension Protection Act of 2006.

There is no indication that this amendment may be applied at the plan sponsor's or EA's discretion.

[AndyH]

Thanks.