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23 Cards in this Set
- Front
- Back
A full funding limitation may apply to limit the |
minimum required contribution |
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The full funding limitation is equal to |
the liabilities less the assets.
The overall full funding limitation is equal to the ERISA full funding limitation, but in no event less than the RPA’94 full funding limitation. |
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The full funding limitation is determined as of |
the close of the plan year.
Each item used for the limitation may be determined as of the valuation date, and increased with applicable interest to the end of the plan year. |
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ERISA full funding limit
Liability is equal to |
the Accrued Liability plus the Normal Cost, generally determined under the cost method.
The accrued liability and normal cost are determined under the entry age normal method for spread gain methods (see Revenue Ruling 81 13). Note that this is also true for the attained age normal method. |
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ERISA full funding limit
Assets are equal to the smaller of
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the market value or the actuarial value of assets.
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ERISA full funding limit
The credit balance in the funding standard account
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is used to reduce the assets. |
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ERISA full funding limit
Any funding deficiency is |
not used to increase the assets. Note that the assets do not include contributions already paid for the current plan year. |
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ERISA full funding limit
If benefit payments have been made during the year, then |
either both the accrued liability and the assets must be reduced by the benefit payments (accumulated at the valuation interest rate to the end of the year), or neither should be adjusted. |
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RPA’94 full funding limit
Liability is equal to |
- 90% of current liability.
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RPA’94 full funding limit
Current liability includes |
the increase in the current liability due to accruals for the current year (current liability normal cost).
Note that if the current liability is calculated as of a date other than the end of the plan year, it must be increased with interest to the end of the plan year using the current liability interest rate. |
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RPA’94 full funding limit
The current liability must be reduced by |
benefit payments (accumulated with interest at the current liability interest rate to the end of the plan year) made during the plan year.
Note that if the current liability is given as of the end of the plan year, this reduction has already been made. |
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RPA’94 full funding limit
The current liability interest rate must be between |
90% and 105% of the weighted average of rates of interest based upon the 30-year treasury rates during the previous 4 years.
If the plan’s valuation interest rate is within this range, then that interest rate must be used. |
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RPA’94 full funding limit
The mortality table used to determine the current liability is |
prescribed by the Secretary of the Treasury, and is based upon the static or generational mortality tables prescribed for single employer plans under IRC section 430(h)(3)(A). (Note that a substitute mortality table cannot be used for this purpose.) |
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RPA’94 full funding limit
Assets are equal to |
the actuarial value of assets.
There is no reduction for the credit balance in the funding standard account.
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RPA’94 full funding limit
Note that the assets do not include |
contributions already paid for the current plan year.
Assets must also be reduced by benefit payments (accumulated with valuation interest to the end of the year) made during the year. |
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A full funding credit to the funding standard account is equal to |
the difference, if any, of the minimum required contribution (without regard to any prior credit balance or contributions for the current year) and the full funding limit. |
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If there is a full funding credit for a plan year, then all |
amortization bases in that year’s funding standard account are deemed to be fully amortized for the following year. |
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Minimum funding due date and contributions
The due date for minimum required contributions is |
81⁄2 months after the end of the plan year. |
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Minimum funding due date and contributions
Contributions made after the last day of the plan year are |
deemed to have been paid on the last day of the plan year. |
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Minimum funding due date and contributions
There is a 5% excise tax upon |
failure to meet minimum funding (see IRC section 4971(a)(2)), payable by the employer.
In addition, a 100% excise tax applies if the minimum funding requirement is still not paid as of the close of the tax year in which the 5% excise tax was imposed. |
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Valuation Date
The valuation date can be |
any date during the plan year or within one month prior to the plan year. |
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Valuation Date
The prior year valuation date may be used if,
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as of that valuation date, the plan’s asset value is at least as large as the plan’s current liability. |
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Valuation Date
A change in the valuation date is deemed to be |
a change in funding method subject to IRS approval. |