Deemed Burn for AFTAP <60%

[Guest Jcarolan]

I have an end of year valuation for a 12/31/2008 DB plan with the following data:

Target Liability: 253,789

AVA: 150,354

Pre-Contributions: 43,736

Interest on Pre-Contributions: 721

Carryover balance @ EOY: 74,043

With this data, the 2009 AFTAP will be certified at 47.59%. However, a deemed burn of $42,538 will bring the AFTAP to 60%.

I have two questions:

1. How does the deemed burn affect the 2008 valuation?, and

2. Is the deemed burn reported on the 2008 SB or the 2009?

Joseph Carolan

[Mike Preston]

Your numbers don't seem to be consistent with your percentages, can you detail your calculations?

[david rigby]

Under IRC 436, if burning any COB will eliminate a restriction, then the burn is not optional. Therefore, the AFTAP occurs after the burn, not before.

[Guest Jcarolan]

I have an end of year valuation for a 12/31/2008 DB plan with the following data:

Target Liability: 253,789

AVA: 150,354

Pre-Contributions: 43,736

Interest on Pre-Contributions: 721

Carryover balance @ EOY: 74,043

With this data, the 2009 AFTAP will be certified at 47.59%. However, a deemed burn of $42,538 will bring the AFTAP to 60%.

I have two questions:

1. How does the deemed burn affect the 2008 valuation?, and

2. Is the deemed burn reported on the 2008 SB or the 2009?

Joseph Carolan

(AVA+Pre-Contributions+Interest on Pre-Contributions-COB)/Target Liability=AFTAP

(150,354+43,736+721-74,043)/253,789=0.4759

If the carryover balance is reduced to $42,538 (burning $31,505), the result is:

(150,354+43,736+721-42,538)/253,789=0.60

I see where I said I needed to burn $42,538, but really I need to burn enough of the FSCOB to bring it down to $42,538 at the end of the year