2010 Schedule SB Line 11(d) column (b)

[Guest Jcarolan]

The 2010 Schedule SB instructions for Line 11(d) read as follows:

"Enter the amount of the excess contributions for the prior year (with interest) that the plan sponsor elected to use to increase the prefunding balance. This amount cannot be greater than the amount reported on line 11c."

What is your read of the "(with interest)" piece of these instructions?

Does that mean that I have a signed election from the client with one number, but I will enter a different number (that elected number adjusted presumably with the prior year's effective rate) on line 11(d) column (b), or something else?

Joseph Carolan

[My 2 cents]

Assuming that the amount shown on item 38 of the prior year's Schedule SB was NOT increased to the end of that year, one copies it into this year's 11a, shows the interest for a year on the 11a amount at the prior year's effective interest rate (not the actual rate of return for the year), adds the two for 11c, and then puts into 11d the amount being added by election as of the end of last year (or is it the beginning of this year?). Actually easier to understand if you go by the labels on the form itself.

The election itself should make it clear how much is being elected to be added and as of when. The amount elected, as is, should be shown in 11d.

Two notes: First, we only work on plans using beginning of year valuations. Second, we interpret the description of item 38 ("interest-adjusted excess contributions") as calling for the actual contributions to be interest-adjusted back to the beginning of the year, not as calling for the excess contributions to be interest-adjusted forward to the end of the plan year (although that is what we would have expected, but item 11a & b implies that 38 should always be as of the start of the prior year, again assuming the valuation date is the first day of the plan year - haven't tried to figure out how these things work using a different valuation date).