Can someone please confirm my understanding of applying balances.

Case 1. As of 1/1/2009
Assets $750,000
COB $ 0
PFB $80,000
FT $850,000
TNC $340,000
MRC $365,000

1/1/2009 FTAP 78.8%

To avoid lumpsum restrictions, there is a deemed waiver to apply a portion of the PFB to get FTAP to 80%. Say about $ 15,000 of the PFB is waived then the 1/1/2009 MRC reduces to about $ 360,000.. The 2009 FTAP is thus certified at 80% with a lower MRC.

Case 2. A plan having quarterly contributions requirement for the 2009 calendar year does not make them in time. At 9/15/2010 they realise they do not have enough money to put in and end up with a funding deficieny due to the penalty charges. They decide to voluntarily waive $ 10,000 of their COB to fully fund the 1/1/2009 MRC.

In this case will the 1/1/2009 valuation have to be rerun and recertified with the reduced balance? This will reduce the 1/1/2009 MRC(due to reduced shortfall) but I think that since this waiver came much later into the next plan year and since this is a voluntary reduction, the effect can be seen through the reduced balance itself and there is no need to rerun the prior valuation.

To conclude does this mean that a deemed waiver requires the valuation to be re-run, but voluntary application of balances does not.

Sorry if I sound confusing since I really am.

Thanks for all help!!

Are you saying in the second example that they are electing in 2010 to "waive" the $10,000 or "apply" the $10,000?

If they elect to apply $10,000 towards the 2009 plan year minimum required contribution, the 2009 valuation would stand. To do so, they would have to make the election on a timely basis (can't recall off the top of my head whether the deadline for such an election would be 9/15/10 or the filing deadline for the 2009 Schedule SB, which was probably extended to 10/15/10).

I don't recall exactly what the deadline is for waiving PFB as of the end of the 2008 plan year to improve the 2009 funded status. Isn't it something like the payment or filing deadline for the 2008 Schedule SB?

Supposing that the amortization factor is the usual 6 or so, wouldn't electing to use PFB be much more effective in getting the minimum contribution satisfied than electing to waive the same amount of PFB? Waive $10,000 and the minimum goes down around $1,600 to $1,700. Apply $10,000 instead and the full $10,000 is applied towards the minimum.

What is the point of assuming that they did not pay the 2009 quarterlies on time as part of the second example?