FAQ 838: PPA Actuarial Value of Assets for Maximum Purposes

Problem: How are assets determined for maximum deductible purposes when there are pre-contributions in end of year valuations?

Solution: When doing an end of year valuation and an employer makes contributions before the valuation date, you should enter the total plan assets, including the pre-contributions, in the Costs \ CONTRIB screen Market Value of Assets field. If the actuarial value of assets is different than market value, enter those assets, again including the pre-contributions, in the Actuarial Value of Assets field of the Costs \ CONTRIB screen. On the Costs \ PLANCNTB screen, enter the contributions made on or before the valuation date with the date, amount and category C. When you run Calculations > Valuation with Calc PV of Contribs set to Yes or Only , interest on the pre-contributions will be calculated using the effective interest rate stored on the Values > VALPPA screen, and both the amount of the pre-contributions and the amount of interest will be stored on the Costs \ CONTRIB screen in the Pre-Contributions and Interest on Pre-Contributions fields. If Calc PV of Contribs is set to Yes, the total of these two amounts will be subtracted from the Actuarial Value of Assets. NOTE FOR 1ST YEAR EOY PLANS The pre-contributions and interest can be manually input in the Costs \ CONTRIB screen in a plan's initial plan year. Alternatively, the General \ Identification \ ID screen's Effective Date can temporarily be changed to an earlier year to have the system calculate and store the pre-contributions and interest in the Costs \ CONTRIB screen based on inputs in the Costs \ PLANCNTB screen. Once the pre-contributions and interest in the Costs \ CONTRIB are reviewed, change the ID screen's Effective Date to the correct value. The amounts in the pre-contribution and interest fields will not change during Calculations > Valuation in a plan's initial year.