carrots
Oct 30 2008, 12:03 PM
Under PPA, once a new plan has been designed, there doesn't appear to be any first year funding flexibility, other than that caused by the timimg of contributions.
If using a BOY valuation date, the FT is $0 (415 $ limit, with no YOP). So, the cushion amount is $0.
So, the maximum contribution is equal to the minimum contribution (TNC), as adjusted for date of payment.
Comments, please!
For example, would it help to switch to EOY valuations?
AndyH
Oct 30 2008, 12:29 PM
You are right.
There are going to be a lot of mad new clients who will be told very late that their deduction does not match their cash balance proposal, for first year plans in 2008, unless they use a interest credit above 6% to match the segment rates.
Some stopped doing them early on as a result. Others are still doing proposals that cannot be backed up without creating a problem for the client.
(Unless the law changes and creates a cushion, that is).
p.s. to my knowledge, there is currently no automatic approval to switch from an EOY val to a BOY val after 1/1/2008, so I'd tread cautiously on new EOY vals.