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 the Quarterly Interest program (Calculations > Actuarial > Quarterly Interest), 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. When Calculations > Valuation are run, the total of these two amounts will be subtracted from the Actuarial Value of Assets. EXCEPTION FOR 1ST YEAR EOY PLANS The only time pre-contributions and interest are not stored is when they are made in a plan's initial plan year. In that case, valuation assets should be zero. You can still determine the interest value by running the Quarterly Interest program and printing the Pre contrib and interest report.