FTAP/AFTAP < 60%

[Dinosaur]

I am preparing a 1/1/2009 valuation and calculate an FTAP/AFTAP of about 53.0% A deemed election will not bring it up to 60% so I'm stuck at 53.0%.

Since < 60%, benefits are frozen and no lump sums are allowed. How is this reflected in the valuation? Do I just do the valuation as in the past. It doesn't make sense that there would be no accrual (no TNC) for the 2009 year. How about showing benefits to participant?

[Andy the Actuary]

Need to value as if restrictions don't apply. Look to regs on benefit statements just as soon as they are issued!

If Plan does not have accrual restoration provision, then makes no sense to illustrate. If plan has restoration, still makes no sense to illustrate until accruals are restored -- if they are restored.

[Guest webuck]

Section 203 of WRERA'08 allows the 1st PY beginning in the period 10/1/2008-9/30/2009, e.g., calendar PY 2009, to use the 2008 AFTAP solely for determining whether a benefit freeze would apply to the 1st PY beginning in that period. Thus if the 2008 specific AFTAP exceeded 60% there would be no freeze of accruals for the 2009 PY. However, all other restrictions (i.e., lump sums, benefit improvements) would be based on the (lower) 2009 AFTAP.