A very simple question

[johnyang2007]

Can anyone explain or refer me to a source regarding the difference between a pre-funding balance and carryover balance?

Thanks in advance!

[BadBeatMe]

Can anyone explain or refer me to a source regarding the difference between a pre-funding balance and carryover balance?

Thanks in advance!

I can refer you to the internal revenue code, but it would be easier to just explain it.

The carryover balance is a credit balance created by the plan sponsor making contributions in excess of the minimum for plan years beginning prior to January 1, 2008. The prefunding balance is a credit balance created by making excess contributions after that.

[Mark Cavazos]

I can refer you to the internal revenue code, but it would be easier to just explain it.

The carryover balance is a credit balance created by the plan sponsor making contributions in excess of the minimum for plan years beginning prior to January 1, 2008. The prefunding balance is a credit balance created by making excess contributions after that.

But they are not treated exactly the same way. So, there is an instance when one would want to preserve COB over PFB. And a variation when one would want to dump the COB.

[kg1128]

gotta use (or dump) cob before pfb. you can add excess contribution to pfb, but not to cob. cob can still increase if interest > usage or dump.

[Zakk Wylde]

Ideally you have COB=PFB=0.

[Duffer]

Ideally you have COB=PFB=0.

Because Zakk never deals with clients who have economic cycles.
Sorry, but your one-size does not fit all.

[Zakk Wylde]

Well the downsides of carrying credit balances basically offset the advantage of having them. And the logic is nonsensical from the client's perspective -- "I over-contributed in the past, so my AFTAP is lower? WTF?" That's why I love my clients with zero CBs.

[Zakk Wylde]

Duffer, you play blues guitar? What's your setup?

[Duffer]

Duffer, you play blues guitar? What's your setup?

I do a little work on acoustic, mostly on a beatup old electric, and all for my private enjoyment. Sometimes, I port my electric licks into a keyboard for a combined track, but mostly just enjoy recreating some of the classic work I love. Computer-based mixers add another level of toys but not during heavy work periods.

You?

[Duffer]

Well the downsides of carrying credit balances basically offset the advantage of having them. And the logic is nonsensical from the client's perspective -- "I over-contributed in the past, so my AFTAP is lower? WTF?" That's why I love my clients with zero CBs.

For the sponsor who overfunds beyond 100%, the balances are no big deal, but we have had plans that needed that balance to avoid funding penalties, aftap be damned. Much more valuable for clients with cyclical income, like our realtors or mortgage brokers.

[Zakk Wylde]

I do a little work on acoustic, mostly on a beatup old electric, and all for my private enjoyment. Sometimes, I port my electric licks into a keyboard for a combined track, but mostly just enjoy recreating some of the classic work I love. Computer-based mixers add another level of toys but not during heavy work periods.

You?
I have a Strat and a Schecter C-1 with humbuckers. I just picked up a Digitech multi-effects pedal that can model pretty much any amp or effect so I'm having a lot of fun with that. I finally got the opening down to SRV's "Pride and Joy" where you're downpicking the bass line and using the upstrokes to bang out an open G chord.

[Duffer]

I have a Strat and a Schecter C-1 with humbuckers. I just picked up a Digitech multi-effects pedal that can model pretty much any amp or effect so I'm having a lot of fun with that. I finally got the opening down to SRV's "Pride and Joy" where you're downpicking the bass line and using the upstrokes to bang out an open G chord.
I am officially envious.
My aspiration is Jeff Beck's version of "A Day In The Life" which he played in 2007 at the Chicago Guitar Festival.