| FAQ 910: PPA Shortfall Amortization Base - Funding Relief for ARP21 or PRA 2010 |
How do I enter the shortfall payment information to reflect funding relief?
ASC has ARP21 (American Rescue Plan Act of 2021) and PRA 2010 (Pension Relief Act of 2010) shortfall payment relief options on the Plan Specifications \ Values \ VALPPA screen. The ARP21 and PRA 2010 relief instructions in ASC are described below. For either case, after editing the VALPPA screen for the amortization payments, review the ASC > Reports > Valuation > PPA DB > Shortfall Amortization report to ensure the payments are handled as expected.
I. ARP21 FUNDING RELIEF
For plans that have elected to use the ARP21 funding relief in a prior plan year, enter the valuation date that first reflected the use of ARP21 relief in the Values \ VALPPA screen \ ARP21 Relief 1st Val Date field. There are four categories based on whether the ARP21 Relief 1st Val Date field is before, on, after the valuation date of the plan, or has been left blank.
a) ARP21 Relief 1st Val Date field is before the valuation date
When the date entered is before the valuation date, the system will not retroactively remove amortization payments nor calculate a previous year's amortization payment using a 15-year amortization method. On this VALPPA screen, edit the prior years' Amortization Payments to match the payments as shown on their latest 5500 Schedule SB.
The system will value the amortization payments using the 15-year amortization method.
b) ARP21 Relief 1st Val Date field is the same as the valuation date
If the current year is reflecting ARP21 shortfall amortization relief, enter the current valuation date in the Values \ VALPPA screen \ ARP21 Relief 1st Val Date field. When this date is the same as the valuation date, during Calculations > Valuation, the system will remove the Amortization Payments for prior plan years. The Current Amortization Payment, if any, will be calculated using the 15-year amortization method.
c) ARP21 Relief 1st Val Date field is after the valuation date
When the date entered is after the valuation date, the system will value the amortization payments using the original PPA 7-year amortization method, provided the valuation date is before 1/1/2022.
d) If no ARP21 Relief 1st Val Date is entered
Calculations > Valuation will use PPA 7-year amortizations for plan years before 1/1/2022. For the first plan year starting in 2022, the system will remove prior amortizations during these calculations and use a 15-year amortization for any new installment. Years after 2022 will use 15-year amortization method to value the installments on the VALPPA screen.
II. PRA 2010 FUNDING RELIEF
For PRA 2010 relief, click on the PRA 2010 Funding Relief button at the bottom of the PPA section on the Values \ VALPPA screen. If funding relief was elected in only one prior plan year, enter the valuation date of that plan year in Val Date 1. For the 2+7 method, enter the payment for years 3 through 9 in the Payment 1 field, and enter the payment for years 1 and 2 in the Interest 1 field. For the 15-year method, enter the payment in the Payment 1 field and leave the Interest 1 field blank.
If PRA 2010 funding relief was elected in two prior plan years, enter the information for the earliest election plan year in the fields labeled "1", and enter the information for the latest election plan year in the fields labeled "2".
Do not enter any PRA 2010 payment information in the "Amort. Payment n years ago" fields. These fields are for payments under the original 7-year method only.
To elect PRA 2010 funding relief method for the current plan year, click on the PRA 2010 Funding Relief button on the VALPPA screen and use the drop-down menu in the Method box to select the method for ASC to use.