AFTAP after Technical Corrections bill

[dmb]

Plan Year is 7/1-6/30. The initial AFTAP for plan would have been 68% which triggered deemed waiver of $660,000 of $680,000 credit balance to reach 80%. Enter Technical Corrections, with the assumed rate of return, assets increased enough to cut deemed credit balance waiver in half. Is it feasible to revise AFTAP or is credit balance considered waived based on original calculation?? Thanks.

[david rigby]

IMHO, since the changes in WRERA are retroactive, since should (must) recalculate the AFTAP at your valuation date. That replaces any prior AFTAP calculation.

[Mike Preston]

Enter Technical Corrections, with the assumed rate of return...

Could you clarify what provision provides for an assumed rate of return?

[david rigby]

I think this is the applicable reference. IRC 430(g)(3), last sentence, is amended to include reference to expected earnings:

Old:

‘‘Any such averaging shall be adjusted for contributions and distributions (as provided by the Secretary).”

New:

‘‘Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan’s actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)©(iii)), as specified by the Secretary of the Treasury.’’

[Mike Preston]

Thanks