Takeover Valuation and Timing

[abanky]

i just got a takeover plan, calendar year, less than 100 participants. It was suppose to have a 1/1/2010 valuation, but wasn't done.

I'm assuming my first step would be to issue a 10/1 aftap for full restrictions. Correct?

[david rigby]

A few thoughts, in no particular order:

- Are you sure no AFTAP certification was issued? (No valuation on October 25 is not the same as no certification.)

- If none issued, is any action required to accomplish "full restrictions"?

- Participant notification?

- If you issue a 2010 certification now, there is no impact on 2010, but what is its impact on 2011?

[abanky]

A few thoughts, in no particular order:

- Are you sure no AFTAP certification was issued? (No valuation on October 25 is not the same as no certification.)

- If none issued, is any action required to accomplish "full restrictions"?

- Participant notification?

- If you issue a 2010 certification now, there is no impact on 2010, but what is its impact on 2011?

Thanks David for the reply.

I'm positive no AFTAP was issued.

My thoughts would be to certify the aftap with full restrictions now, issue a Notice of Benefit Restrictions, do the 1/1/2010 Valuation.

[david rigby]

My thoughts would be to certify the aftap with full restrictions now, issue a Notice of Benefit Restrictions, do the 1/1/2010 Valuation.

Carefully read IRS reg. 1.436-1(h).

[My 2 cents]

1. Nothing needs to be certified now to have full restrictions apply to 2010. That is automatic if no AFTAP is certified by 10/1/10.

2. Feel free to certify an actual AFTAP now - it is my understanding that next year's deemed AFTAP will be based on that . For example, if you certify 82% now for 2010, no accelerated distributions could be made during the remainder of 2010, but you would be able to immediately resume making them on January 1, 2011. Under that example, absent a full or range 2011 AFTAP certification to the contrary before April 1, 2011, the plan would then go into the "more than 60% - under 80%" range on April 1, 2011 and have partially restricted accelerated distributions on or after April 1, 2011 until such time as the plan's AFTAP is certified to be at least 80%.

3. Notices should be issued as appropriate. Getting a little late for that notice that accelerated benefit distributions are fully limited on or after 10/1/10 (unless already in a fully restricted status)!