AFTAP < 60%

[emmetttrudy]

10/1 plan year completed the most recent valuation and AFTAP was certified at less than 60% triggering an automatic plan freeze. What are the rules regarding when the plan can become unfrozen. Does the AFTAP need to be certified at 80% and then it can become unfrozen?

[Effen]

AFTAP > 60% unfreezes it, but you need to check your document to see how/when/if benefits are restored.

Couple other things - when determining the TNC you ignore the freeze, unless that plan was actually amended to freeze accruals.

Also, it wasn't clear what year you are talking about, but WRERE gave an exemption from the freeze for 2009, IF your AFTAP was > 60% in 2008.

[Guest DFerrare]

If the plan requires an amendment to restore accruals, I believe the AFTAP must be 80% after restoration.

[emmetttrudy]

It is a 10/1 plan year. The AFTAP for 10/1/2008 was greater than 60%. Are you saying that if the AFTAP for the 10/1/2009 plan year is less than 60% than I can rely on the 10/1/2008 plan year AFTAP and prevent a freeze?

[Effen]

I think you are off by a year. Basically if your 10/1/2007 was > 60%, you didn't have to freeze accruals for 10/1/2008. However, if your 10/1/2009 is <60%, you need to freeze.

Sec 203 of WRERA:

"Under the provision, in the case of the first plan year beginning during the period of October 1, 2008, through September 30, 2009, the future benefit accrual limitation of section 436 is applied by substituting the plan’s adjusted funding target attainment percentage for the preceding plan year for the percentage for such first plan year in the period. Thus, the future benefit accrual limitation of section 436 is avoided if the plan’s adjusted funding target attainment percentage for the preceding plan year is 60 percent or greater. The provision is not intended to place a plan in a worse position with respect to the future benefit accrual limitation of section 436 than would apply absent the provision. Thus, the provision does not apply if the adjusted funding target attainment percentage for the current plan year is greater than the preceding year.

Effective Date

The provision is effective for the first plan year beginning during the period beginning on October 1, 2008, and ending on September 30, 2009.