Moot Point?

[Andy the Actuary]

Client should have made minimum quarterly contributions by 4/15/2014 and 7/15/2014 based upon 1/1/2013 and 1/1/2014 valuations that were performed pre-HATFA. Of course, client was instructed to but failed to make contributions so should have notified participants and possibly PBGC (at some later date). We just found out about this.

And then? And then? And then? Eh, eh. Along came HATFA with the result that the 2014 MRC=0, so in fact, no quarterlies were required in 2014. Perhaps, this question is no different than if we were just preparing 1/1/2014 valuation now (and there was no HATFA) and we discovered 2014 MRC=0 even though 2013 suggested the safe-harbor quarterly.

Not sure how the rest of you would treat this but I'm going nighty night.

[Effen]

I think it time to fluff up the pillow. You thought they had quarterlies due, but in fact they did not. Your clients were very wise not to spend their cash foolishly.

[My 2 cents]

If the 2014 MRC is $0, then, while the plan may be required to make quarterly contributions in 2014 (because the 2013 FTAP was not at least 100%), the amount of each required quarterly contribution is $0. Send a thank-you note to your representative in the House and your senators, because as of the enactment of HATFA, there was no failure to make required quarterly contributions this year. No overdue quarterlies, no reportable event failure, nothing. All is copacetic. Isn't that what Congress meant to do?

How could anyone (regulator or practitioner) come to a different conclusion?

[tymesup]

Suppose the maximum deductible contribution was equal to the minimum required contribution and was deposited in 2014. If HATFA reduced the MRC, you now have a non-deductible contribution.

[masteff]

Perhaps that's why HAFTA has a provision allowing to elect out of retroactive application?

https://beta.congress.gov/bill/113th-congress/house-bill/5021/text

(e) Effective Date.--

(1) In general.--The amendments made by subsections (a), (b),

and (d) shall apply with respect to plan years beginning after

December 31, 2012.

(2) Elections.--A plan sponsor may elect not to have the

amendments made by subsections (a), (b), and (d) apply to any plan

year beginning before January 1, 2014, either (as specified in the

election)--

(A) for all purposes for which such amendments apply, or

(B) solely for purposes of determining the adjusted funding

target attainment percentage under sections 436 of the Internal

Revenue Code of 1986 and 206(g) of the Employee Retirement

Income Security Act of 1974 (29 U.S.C. 1054(g)) for such plan

year.

A plan shall not be treated as failing to meet the requirements of

section 204(g) of such Act and section 411(d)(6) of such Code

solely by reason of an election under this paragraph.

[My 2 cents]

I suppose it is possible that the maximum deductible contribution could be the minimum but I am having a lot of trouble coming up with numbers that would produce that result. Note that if one is in that situation and the contribution was for the 2014 plan year, there is no electing to defer recognition.

How can 150% of a non-MAP funding target be less than the ongoing shortfall amortizations on a MAP/HATFA basis, especially for a plan whose assets are less than the MAP/HATFA funding target? But then, the title of this thread is "Moot Point", so perhaps there is not a real-life situation where this is a problem.