Sole Prop Minimum Funding Contribution Using Spreadsheet

[ubermax]

Just wondering if anyone has used a spreadsheet to work out the Min. Funding Contribution for a Sole-Prop with a DB plan ?

I recall trying to do it years ago & as I recall it required a lot of trial and error - just wondering if anyone has tried it and, if so, how they went about it in general ?

[John Feldt ERPA CPC QPA]

You can enable the iterative calculation if you wish to avoid entering a number over and over.

I'm sure a lot of enrolled actuaries use Excel for handling sole prop DB plans.

[david rigby]

... and those Enrolled Actuaries might be glad to engage in a service relationship with you. Expecting this for free seems presumptuous. To me, anyway.

[tymesup]

I used to solve the linear equation to determine the maximum. Since it varied by funding method and applicability of the full funding limitation, it was easier to iterate.

[ubermax]

Not sure where Dave is coming from ? service agreement ? expectation of free advise ? I'm an EA and can figure it out myself if need be - have a friend who has a SEP and is thinking about adding a DB - just got me thinking how I would do it using Excel , that's pretty much it.

And John, judging by the response count to my post , I'd bet that most EA's these days are utilizing a valuation system for sole-prop DBs .

For the DC we have for example : Net Sch. C - 1/2 SE - 6% EI = EI and we solve ; extending to the solo DB case we get , Net Sch. C -1/2SE - ( an Excel cell that calculates TNC & SFC Using EI where needed) -EI =0 and can use Goal Seek to hopefully converge to EI - you essentially start with a seed value for EI and let Goal Seek take it from there .

But I don't think the DB equation is always solvable and I think you end up getting close and then adding some to get a "recommended" contribution in those cases.

If anyone runs these through Datair , Garcia , or any of the other "small plan" systems , I'd be curious to know if the system always produces a unique solution.

This is basically a personal interest and academic question .

[John Feldt ERPA CPC QPA]

A service provider is used for the multi-decrement larger plans. Generally, though, you're right that a contribution recommendation is provided which may be lower than the full allowable contribution.