Election to apply credit balance in excess of funding requirement

[dmb]

A calendar year 2013 plan will have a gain base for the current plan year if the employer elects to apply any of the 1/1/13 PFB to the 2013 funding requirement. The plan also has about $60,000 of COB at 1/1/13. The itch is that if no PFB is applied, the gain base won't be set up because the funded status will be 100% if assets are not reduced by PFB and the funding requirement is about $80,000. If PFB is applied then the funded status drops below 100% and the gain base gets set up and the funding requirement becomes $40,000.

Can the employer elect to apply all of the COB plus $1 of PFB so the result is the lower funding requirement? And is there any consequence of electing to apply credit balance in an amount in excess of the funding requirement?

Thanks for any and all responses.

[Andy the Actuary]

Is there enough PFB so that if part of the COB was waived, the FTAP would still be below 100% so that you get your credit base? That way, it would not be necessary to apply more credit balance than the funding requirement.

The issue is that the remaining bases are not allowed to go negative. It doesn't matter that the PFB applied is $1.

[tymesup]

We just did one of these with a $1 application of the PFB, FWIW. The COB was small, so there wasn't much to lose. Felt silly using $1, but it is what it is.