change in val date, look back month

[Gary]

I recieved a Schedule SB to review.

The plan (one participant) has term date of 3/15/2011.

Prior to 2011 the valuation was a last day of plan year val, thus the 2010 val date was 12/31/2010.

The lookback month was 3 months prior to val date (i.e. 9/2010).

The 2011 val is a 1/1/11 val with a four month look back.

Hmmmn.

As far as I know:

the val date can't be automatically changed in 2011, so it would still need to be last day ofplan year and the lookbackmonth cannot be changed for 2011 either.

Of course the changes would have been fine for 2010.

does anyone know of anything that supersedes my assertion? I thought there may be some latitude in year of plan term, but didn't explicitly find it post PPA.

thanks.

[Guest AGreen]

Agree that val date needs to be "EOY" for 2011. But the big question is what does EOY mean. If assets not distributed by 12-31-11, then no problem. Valuation can be done as usual as of 12-31-11.

But if assets are distributed before 12-31, does EOY still mean 12-31, or the month of distribution? There's been lots of discussion about this on other forums and blogs. If you go with 12-31 even with an earlier distribution month, and assets were sufficient for all PVABs, then the valuation will have zero assets, zero FT, etc., and the Schedule SB will have lots of zeros also.

But what if assets are not sufficient, and some participants did not get their full accrued benefit? Then the 12-31 valuation will have zero assets, but a positive FT to reflect the portion of the accrued benefit not taken as a distribution. Then you might end up with a MRC, depending on prefunding balances, etc.. And now we have more assets that need to be distributed.