Suppose you have a calendar year 1 participant DB.

They were not able to provide investment information until after 4/1/08. The AFTAP was certified 9/15/08 at 87%, so actually 77%. Since then, they have made a contribution that will put them over 100%. Can they terminate the plan 12/31/2008 without benefit restrictions or must we wait until 2009 to terminate and have a new AFTAP done?

Thanks much.

Wasn't it the 2008 AFTAP certified on 9/15/08? If so, why are you reducing it by 10 percentage points? That wouldn't happen until 4/1/09 without a 2009 certification.

Blinky,

As of 1/1/2008, the plan's actuarial value of assets = $1,444,000. The target liability on that date is $1,655,000, which gives us an AFTAP of 87.2%. However, it was not certified by 4/1/2008, so it drops by 10% as long as it is certified by 10/1/2008, which it was. So the AFTAP would be 77.2% for the 2008 year. Since this is less than 80%, we would be restricted on lump sum payments.

The single participant owner would like to terminate the plan 12/31/2008.

They had a good year, so they funded more than the minimum for 2008. So as of now, the plan is very well funded.

My question is, are we stuck with the lump sum restriction if the plan terminated 12/31/2008? In other words are we forced to terminate say January 2009 so we can get an AFTAP cert that will be > 80% thereby lifting the lump sum restriction?

Doug, you are misunderstanding the rules. If you only had the 2007 certification done (i.e. using 1/1/07 numbers for a BOY val) by 4/1/08, then you take that number less 10 percentage points and that is your AFTAP until the 2008 certification is done. You have until 10/1/08 to do a 2008 certification. That 2008 certification is good until 4/1/09. At that point in time if you don't have the 2009 certification done, then you reduce 2008 by 10 percentage points.

Long story short, this plan is not restricted in 2008.

How can you be so dead certain the plan covers minorities?