deemed reduction of Funding Balance

[abanky]

I know this has been discussed before, but...

If the Aftap is 75 w/o cb, and 71 with cb... there doesn't have to be a deemed reduction of credit balances, correct?

however,

if the Aftap is 81 w/o cb and 79 with cb... there is a deemed reduction of cb to get the aftap to at least 80, correct?

[david rigby]

...if the Aftap is 81 w/o cb and 79 with cb... there is a deemed reduction of cb to get the aftap to at least 80, correct?

I thought the deemed reduction applies only if a 436 restriction would be eliminated. thus, if no (possible) restriction, no reduction. Have I missed something?

[abanky]

That's what I meant... if the aftap is 79, there is a 436 restriction, so the CB would have to be reduced to bring the % to at least 80.

I was just wanting to clarify to myself that a 436 restriction did exist and reduction of the CB would not fix it, than you are not required to reduce the CB.

[david rigby]

IRC 436(f)(3).

Note, as spelled out in the (proposed) reg, the restriction is assumed to "apply" if any participant could be limited, without regard to the question "did any participant terminate/retire...?"