New Plan AFTAP

[Guest DBAnalyst123]

Hello,

I have heard that for a brand new plan plan, say, effective 1/1/08, but established at the end of the year, the AFTAP is deemed to be 100%. Is that correct? Do we need to send the client anything? If so, what calculation do we show? Zero/Zero is certainly not a number.

Thanks.

[Effen]

As far as I know there is still no answer. There is lots of discussion about this on this board if you do a search. Here is one you may want to read.

http://benefitslink.com/boards/index.php?s...mp;hl=undefined

From a practical matter is doesn't really matter since benefit restrictions don't apply for new plans.

We did AFTAPs for new plans and showed them as 0%, not 100% and I believe we told PA's to pass out notices that tried to explain the situation.

[Guest DBAnalyst123]

Thank you, Effen!

Still confused though! The powers that be at my office want to send letters showing 100%. Quick question --- in your letters showing zero, did you provide any mathematical equations, or just stated that it was zero percent?

[Andy the Actuary]

Thank you, Effen!

Still confused though! The powers that be at my office want to send letters showing 100%. Quick question --- in your letters showing zero, did you provide any mathematical equations, or just stated that it was zero percent?

My old pappy used to say, "Don't volunteer information." Here is the extent of my certification:

The following certification is required by the Pension Protection Act of 2006. Please retain it in the Plan’s files. There is no action that this requires taking.

I hereby certify that as of January 1, 2007, the AFTAP (Adjusted Funding Target Attainment Percentage) of the referenced plan was 119%"

[Effen]

Although Andy's advice is probably the best, our AFTAP certification provided the basic calculation including the funding target, value of assets, adjustments to the assets (COB, PF) and the percentage. For first year plans everything was 0, including the AFTAP.

We sent the certification along with a cover letter that explained the stupidity of the rule.

[mwyatt]

Actually, I'd go along with the Jim Holland exception (dating back to new plan Current Liability percentages on the Schedule B) to mathematical principles that 0/0 in the eyes of the IRS is 100%.

[Andy the Actuary]

Although Andy's advice is probably the best, our AFTAP certification provided the basic calculation including the funding target, value of assets, adjustments to the assets (COB, PF) and the percentage. For first year plans everything was 0, including the AFTAP.

We sent the certification along with a cover letter that explained the stupidity of the rule.

Being a one-man show, I have the luxury of doing whatever I darn well please, without the tempering or tampering of other professionals. Ergo, I choose the fewest words. When the firm population exceeds one, the opinions of many must be considered and respected. I opt for the position to do what the law says but be prepared to provide supporting documentation if asked.