Calendar year plan has following characteristics for 2008.

2007 contribution without regard to FSA CB was $0 so no quarterly contribution due.

FT = 2,000,000
TNC=100,000
Assets=2,400,000
FS COB=900,000

Client wishes to avoid making any contribution for 2008 and in the great hereafter.

If client elects to burn 600,000, then for 2008, we have FT - (Assets - FSCOB) + TNC = 0. Further, there will be no quarterly contribution requirement in 2009 and most likely, no contribution after burning or using credit balances in 2009.

Alternatively, client could choose not to burn credit balance. This will effectively set up 7 year amortization of CB which client can then offset using the FSCOB. There would, however, be a quarterly contribution requirement for 2009 and it might be $0 or FSCOB could be used to offset.

Appart from the apparent administrative advantages of the first approach, is any advantage to the client perceived selecting one approach over the other?

Under the first approach you have $300,000 of FSCOB left for 2009 (ignoring interest).

Under the second approach you will be exempt from setting up amortization base ((Assets-Prefunding CB only) / FT >92%).
Therefore you will only use $100,000 of FSCOB to cover the 2008 minimum, and another $100,000 of FSCOB to cover the 2009 minimum/quarterlies.

I vote for the second approach.

Thank you, I stand corrected. No base will be established.