Use of carryover balance

[Guest student_actuary]

I have a plan that has a 2008 AFTAP of 70%, 2007 Funded Ratio of 74%. The 2008 minimum required contribution was $300,000. The plan was subject to quarterlies in 2008.

There was a carryover balance as of 1/1/2008 of $5000. The plan will not be putting in any contribution for 2008. Which would be the correct way to look at this:

(a) Since, the plan’s 2007 Funded Ratio is less than 80%, we cannot use any balances to offset part of the 2008 min reqd contribution.

(b) Since the plan’s first quarterly was due on 4/15/2008 (and was not made), the entire credit balance gets automatically adjusted against part of the required quarterly.

Based on one of the choices above, funding deficiency is calculated accordingly.

I think (a) is the correct way to look at it. Any help appreciated.

[Effen]

I say (a)

[david rigby]

I think there is no requirement to "credit" the CB against a quarterly contribution. I agree with Effen.