Additional Contribution for 2008

[nancy]

I have a client who has a preliminary FTAP as of 1/1/09 of less than 94%. If I recommend that they make an addtional contribution to get the FTAP to 94% how does this contribution get reported on the 2008 Schedule B? Does it make a difference if it goes to the prefunding balance or should it be designated to directly increase the assets and not be counted in the prefunding balance?

[Andy the Actuary]

Presumably, the goal is to avoid having to establish a new base in 2009. In such case, if you include in PFB, then cannot use PFB to offset 2009 contribution. Else, you would have top subtract PFB from assets to determine your transition percent, which would then be < 94%. Inclination would be to include it in PFB because you can always burn later if needed. Creating a PFB will not affect the 436 AFTAP so long as >=94% without regard to COB and PFB.

[SoCalActuary]

I have a client who has a preliminary FTAP as of 1/1/09 of less than 94%. If I recommend that they make an addtional contribution to get the FTAP to 94% how does this contribution get reported on the 2008 Schedule B? Does it make a difference if it goes to the prefunding balance or should it be designated to directly increase the assets and not be counted in the prefunding balance?

The amount goes on line 19b if you determine that it was a 2008 contribution solely for purposes of avoiding a funding restriction.

Alternatively, you consider it a regular contribution on 19c, with a PFB generated. Then the employer does not elect to add it to the PFB by 9/15/09.

Either way, it becomes part of your 1-1-09 assets and you do not have any PFB offset applied.