Required CB Burn

[JAY21]

If 2008 AFTAP (using 2007 data) was above 80% but when preparing the 2008 schedule SB you can "see" your 2009 AFTAP (using 2008 Sch. SB data) will be below 80% and burning the CB will bump AFTAP back above 80% (less restrictive category);

Do you burn the 2008 CB before using any CB to reduce the 2008 minimum funding ?

OR

Do you burn the 2009 CB before using any CB to reduce the 2009 minimum funding ?

Assume 2009 AFTAP not formally prepared or certified yet if that makes any difference.

[Andy the Actuary]

That you are preparing the 2008 Schedule SB implies the 2008 Plan Year has ended. In such case, employer cannot now elect to burn 2008 balances. So, employer would elect to burn COB or PFB in 2009.

"(ii) Election to reduce balances. Any election under paragraph (e) of this section to reduce the prefunding balance or funding standard carryover balance for a plan year (for example, in order to avoid a benefit restriction under section 436) must be made by the end of the plan year to which the election relates."

[SoCalActuary]

That you are preparing the 2008 Schedule SB implies the 2008 Plan Year has ended. In such case, employer cannot now elect to burn 2008 balances. So, employer would elect to burn COB or PFB in 2009.

"(ii) Election to reduce balances. Any election under paragraph (e) of this section to reduce the prefunding balance or funding standard carryover balance for a plan year (for example, in order to avoid a benefit restriction under section 436) must be made by the end of the plan year to which the election relates."

Andy, that is currently the word on the subject. But George Taylor told us of 300 pages of new regs to be issued this summer. There is a promise that the elections will be more flexible in timing, if the rumors from the Boston session turn out to be true.

I'm not betting on this horse race yet!