pre-contributions in valuation and AFTAP

[Audrey]

an EOY valuation small plan, the plan sponsor made the contributions throughout the plan year and nothing else was made after the plan year. I will need to project the contributions as of the valuation date 12/31/2023 then subtract these amounts from EOY asset value as the market value in the valuation. 

but in AFTAP calculation, I just use the EOY asset value without project the contributions, am I right? are there any regulations specifically mention these? thanks!

[C. B. Zeller]

Assuming no credit balances and no annuities purchased for NHCEs, the AFTAP with a BOY valuation date is (assets) / (funding target).

For a EOY valuation, the AFTAP is based on the prior year's funding values, and the formula is (assets + contributions adjusted to valuation date) / (funding target + target normal cost).

In both places, "assets" means plan assets as used for sec. 430 (minimum funding) purposes.

For a plan with an EOY valuation date, the 430 assets do not include any contributions made for the current year prior to the valuation date. You increase those contributions at the effective interest rate to the valuation date, and subtract them from the value of the trust to get the value of assets. This rule is found in 1.430(g)-1(d)(2)

So the numerator for an AFTAP measured at EOY is (assets + adjusted contributions) = ((trust account value - adjusted contributions) + adjusted contributions) = (trust account value)

Which means it ends up being the same thing, but not maybe not for the reason you were thinking.

I would recommend discussing this with the actuary who will be signing the AFTAP.

[Audrey]

1 hour ago, C. B. Zeller said:

Assuming no credit balances and no annuities purchased for NHCEs, the AFTAP with a BOY valuation date is (assets) / (funding target).

For a EOY valuation, the AFTAP is based on the prior year's funding values, and the formula is (assets + contributions adjusted to valuation date) / (funding target + target normal cost).

In both places, "assets" means plan assets as used for sec. 430 (minimum funding) purposes.

For a plan with an EOY valuation date, the 430 assets do not include any contributions made for the current year prior to the valuation date. You increase those contributions at the effective interest rate to the valuation date, and subtract them from the value of the trust to get the value of assets. This rule is found in 1.430(g)-1(d)(2)

So the numerator for an AFTAP measured at EOY is (assets + adjusted contributions) = ((trust account value - adjusted contributions) + adjusted contributions) = (trust account value)

Which means it ends up being the same thing, but not maybe not for the reason you were thinking.

I would recommend discussing this with the actuary who will be signing the AFTAP.

Thank you so much again Corey! have a great weekend!