110% test related

Hi

Doing a 110% liability test for a CB plan.

As far as I know, one can use any reasonable method as long as it is approved by the sponsor and stay with the decision forever.

The methods I am aware of are, 415 lump sum assumptions, 417e assumptions or 430 assumptions. Assume AFTAP is not an issue.

Usually 430 assumptions would yield lowest amounts but in my case nothing is working so looking for another way to lower the liabilities and see if they can pay the HCE who is now terminated and under disability. I would like to get this done before an accrual for 2022 happens which will make things even worse.

Any other methodologies that I am not thinking of? 

I know the bond/annuity etc options but trying to avoid.

Thank you

Not sure what you meant by an annuity option, so here what I have seen. Participant elects lump sum, but you pay only what you can (i.e. annual benefit) and bring the remaining lump sum amount up 1 year with interest. At any time you can pass 110% test, you pay the remaining lump sum.

And just a reminder, 110% is measured after the distribution. Liability is calculated without this person. Asset is calculated subtracting the payment to this person.

The other option is to have the sponsor make a contribution to get the plan 110% funded.

Calavera, I am aware of the math but thank you, very short in assets

C.B., not going to happen, they do not have it.

I guess no other way but wait a year or so and beef up the assets. They may even decide to terminate the plan so can get paid.

See if you can justify lower credited interest rate, or retiring at later ages, or both. 

Cannot justify either, one is plan provisions which I do not want to touch (the return on investments is over 7%), the extended NRA not an option as the HCE is not expected to survive the summer, sadly.