New CBA - 80% AFTAP

[Dinosaur]

We are running a plan with a 11/1 to 10/31 plan year. There are about 110 participants in the plan. We prepared the 11/1/2009 valuation and the AFTAP is about 76%. The current Collective Bargaining Agreement (CBA) runs out in September, 2010. The new CBA may keep the same benefits as in the prior CBA. Since the AFTAP is less than 80%, the plan cannot be amended to increase benefits until the AFTAP is at least 80%.

If the benefits in the new CBA are kept the same (and not increased) and the current CBA is that considered an increase in benefits? I am thinking that it is an increase since the CBA ran out but I want to make sure.

Also, what date would you do the APTAP calculation to make sure that it is at least 80%. Would you run a projection of the AFTAP as of 11/1/2010?

[Dinosaur]

any comments out there?

[FAPInJax]

I thought that the first year that the plan would be subject to PPA would be the 11/1/2010 - 10/31/2011 year because the old CBA was still in effect. Therefore, IF I am correct, then you are still under the old funding rules.

[Guest pwith]

If the new CBA does not increase benefits, meaning that the new CBA does not increase the funding target, then I don't think you have an issue under IRC 436.

[Dinosaur]

If the new CBA does not increase benefits, meaning that the new CBA does not increase the funding target, then I don't think you have an issue under IRC 436.

I am hoping that this the case but I can't find it anywhere in the regs, etc. specifically regarding a CBA. IF the CBA were not renewed then the there would be no future accruals. So a new CBA would effectively increase the benefits. Any other thoughts?