Schedule SB, Line 38b

[Mister Met]

This year, they added an additional item 38b to the 2011 Schedule SB.

What would 38b) be here?

34) Minimum required contribution , before reflecting PFB = $277,000

35) Prefunding Balance = $2,000

36) Additional cash requirement = 34) minus 35) = $275,000

37) Contributions discounted to valuation date = $280,000

38a) Excess of 37 over 36 = $5,000

38b) = portion of 38a attributable to use of PFB= ??

If the PFB was not used, the excess in 38a) would have been $3,000. So is 38b) just then the PFB of $2,000?

Thanks

[Hojo]

This year, they added an additional item 38b to the 2011 Schedule SB.

What would 38b) be here?

34) Minimum required contribution , before reflecting PFB = $277,000

35) Prefunding Balance = $2,000

36) Additional cash requirement = 34) minus 35) = $275,000

37) Contributions discounted to valuation date = $280,000

38a) Excess of 37 over 36 = $5,000

38b) = portion of 38a attributable to use of PFB= ??

If the PFB was not used, the excess in 38a) would have been $3,000. So is 38b) just then the PFB of $2,000?

Thanks

Yes, since you used the PFB as a contribution since 35 is "Balances elected for use to offset funding requirement" and the excess next year that you can add to the PFB will be 3,000. Also, timing becomes an inssue for BOY plans and the rollforward of the balances.

[Mister Met]

In a case like this where there is a PFB being applied, let's say we told client to make $300,000 by 9/15/12 to satisfy (MRC-PFB) but instead they made $300,000 on 6/15/12, and therefore the contributions discounted to valdate were greater than (MRC less PFB)at valdate due to the earlier timing of contribution, would the 3 months fewer discounting on $300,000 then not be included in 38b?

[ScottR]

Yes, it would be.

When you bring the FPB forward with interest, you would normally credit the existing PFB (minus whatever PFB that was applied last year) with last year's actual rate of return, and last year's excess contribution with the effective int rate for last year. To the extent that last year's excess contribution was created by the (needless) application of the existing PFB, that portion (reported on 38b) gets credited with the EIR, and not the actual rate of return. (Does that make any sense? I just don't know anymore...)

This way, you get the same result whether or not you chose to (needlessly) apply PFB to create an excess contribution last year. Personally, I limit my use of PFB to exactly what's needed to avoid a funding deficiency.

... Scott