FAQ 1100: Coding for Extended Funding Deadlines and AFTAP relief under CARES Act of 2020

Problem:

What are the steps to reflect the extended due date relief and/or the AFTAP relief granted by the Coronavirus Aid, Relief and Economic Security (CARES) Act?


Solution:

First a summary of the CARES Act provisions:
AFTAP Relief
- A plan sponsor may elect to treat the plan's adjusted funding target attainment percentage (AFTAP) for the last plan year ending before January 1, 2020, as the AFTAP for plan years which include calendar year 2020.
- See item A. below for instructions.

Funding Relief
- Contributions with due dates within the 2020 calendar year will have due dates extended to January 1, 2021. Interest will be applied for the period between the original due date and the payment date at the effective rate of interest (EIR) for the plan for the plan year which includes the payment date.
- There are 2 categories of contributions that might qualify for relief - quarterly contributions and minimum required contributions.
- See item B. below for instructions for quarterly contributions.
- See item C. below for instructions for minimum required contributions

A. ASC DB Val Steps for Reflecting AFTAP Relief
AFTAP Reports are printed from: Reports > Valuation > PPA DB...
- AFTAP Certification report is unchanged due to CARES Act.
- Subject to actuarial interpretation of the CARES Act relief and plan sponsor election on whether to elect to use the AFTAP relief, users can choose which plan year's AFTAP Certification report to provide to the plan sponsor.


B. ASC DB Val Steps for Reflecting Quarterly Contributions Subject to Funding Relief
1. Values \ VALPPA screen
- Subject to actuarial interpretation of the EIR to use for the interest applied between the original due date and the payment date, you may need to adjust the Effective Interest Rate field on this screen for sole purposes of implementing these instructions.
2. Calculations > Actuarial > Quarterly Interest
- Verify the Required Quarterly Contributions Amount has been recalculated and is correct.
- Manually change each Required Quarterly Contributions Due Date field that is within the 2020 calendar year to 01/01/2021.
- Do not click the Recalculate button.
- Select the desired Report Options to print or click OK to have the system recognize the delayed due date of 1/1/2021 for the quarterly contribution dates that are calculated to be in calendar 2020.
3. Reports > Valuation > PPA DB...
- Quarterly Contributions report will print the dates entered in the Quarterly Interest menu in Step 2 above
- A footnote on Quarterly Contributions report will indicate that due to the CARES Act the deadline on contributions originally calculated to be within the 2020 calendar year has been extended to 1/1/2021.

C. ASC DB Val Steps for Reflecting Minimum Required Contributions Subject to Funding Relief

1. Instructions for BOY Valuations with receivable contributions
- For current plan years, the system is programmed to disregard receivable contributions for the prior plan year if they are made after the deadline for contributing the minimum required contributions for the prior plan year (8 ½ months after the last day of the previous plan year). In addition, the Quarterly Interest program's Receivable Contributions Report for the 2020 Plan Year will not print the 2019 receivable contributions made after the 8 ½ months after the end of the 2019 plan year deadline.
- With CARES Act relief allowing the contributions with a due date in calendar year 2020 to be made as late as 1/1/2021, a workaround is needed to reflect prior plan year receivable contributions made after the 8 ½ months deadline and on or before 1/1/2021. Receivable contributions made before the 8 ½ months deadline do not require a workaround.
- We'll illustrate the workaround steps needed in the 2020 plan year case for a plan with a calendar year plan year and receivable contributions made for the 2019 plan year.
a. Enter 2019 receivable contributions made on or before 9/15/2020
- These contributions may already be listed in the Costs \ PLANCNTB screen of 2020 case if you ran Calculations > Update to New Period from your 2019 case with the contributions already entered.
- Enter any receivable contributions not listed for the 2019 plan year made on or before 9/15/2020 in the Costs \ PLANCNTB screen. Enter the date of deposit, amount, Plan Contribution Category of R, 2019 valuation date, and 2019 Effective Interest Rate.
- Run Calculations > Actuarial > Quarterly Interest to have the system calculate the discounted value of the receivable contributions and store the discounted value of the receivable contributions in the Plan Cntb AdjAmt field of the Costs \ PLANCNTB screen and in the Quarterly Int/Rcvbl Contribution field of the Costs \ CONTRIB screen.
b. Calculate discounted value of 2019 receivable contributions made after 9/15/2020
- The discounted amount of the receivable contribution for 2019 made after 9/15/2020 and on or before 1/1/2021 must be calculated manually outside the system using the appropriate Effective Interest Rate.
- Refer to Chapter 6 - Quarterly Interest and Adjusted Contributions of the DB Reference Manual (Main Menu > Help > Manuals) for examples of how ASC calculates discounted values using the 31-day months methodology.
c. Enter 2019 contribution receivables made after 9/15/2020
- In the Costs \ PLANCNTB screen, enter the date of deposit, amount, Plan Contribution Category of R, the 2019 valuation date, the appropriate Effective Interest Rate, and the manually calculated discounted contribution amount from Step 2 in the Plan Cntb AdjAmt field.
- In the Costs \ CONTRIB screen, add the amount of the discounted contribution amount calculated in Step 2 to the amount currently stored in the Quarterly Int/Rcvbl Contribution field. Click OK to save the update.
- In the Costs \ CONTRIB screen, the Quarterly Int/Receivable Contribution field must be updated to be the sum of
i. The amount already stored in this field (representing discounted amount of 2019 receivable contributions made on or before 9/15/2020), and
ii. The amount calculated in Step 2 of the discounted amount of the 2019 receivable contribution made after 9/15/2020 but on or before 1/1/2021).
- Do NOT run Calculations > Actuarial > Quarterly Interest. If you do, the system will remove the discounted contribution amount that you manually entered in this step.
d. 2019 Discounted Contributions Report for SB Attachment to the 2019 Form 5500
- If you've entered all 2019 plan year contributions in the 2019 plan year case, including those made after the 9/15/2020 deadline, when the Calculations > Actuarial > Quarterly Interest > Discounted Contributions Report is generated it will correctly print the 2019 receivable contribution made on or before 1/1/2021 pursuant to CARES funding relief and apply the interest discount for the correct period of time.

2. For BOY and EOY valuations - Reports > Valuation > PPA DB...
- Minimum Required Contribution report will continue to print the Minimum Balance of Contributions due 8 ½ months past the end of the year.
- A footnote on Minimum Required Contribution report will indicate that due to the CARES Act the deadline on contributions originally calculated to be within the 2020 calendar year has been extended to 1/1/2021.
- Users who want to calculate the Minimum Balance of Contributions due on 1/1/2021 can refer to Chapter 6 - Quarterly Interest and Adjusted Contributions of the DB Reference Manual (Main Menu > Help > Manuals) for examples of how ASC applies interest.