EA-2B / 70% Decline / Withdrawal Liability

[Sandman]

This is what I get for trying to match up Rich G's notes (fairly reliable) against both the Actex manual (completely untrustworthy) and Farber's problem set (fairly reliable).

An employer has a partial withdrawal from a plan due to a 70% decline in contributions. The testing years are 1999, 2000 and 2001.

Farber's problems indicate that the unfunded vested benefits would be calculated at 12/31/1999. Bensic says 12/31/1999 as well. Rick G says 12/31/1998.

Can anyone nail this down definitively? Is it the last day of the last plan year before the three year testing cycle, or is it the last day of the first year in the three year testing cycle?

Nothing like the last minute, is there?

[yeppers-wsmn]

In general, you want the UVB for the employer assuming a complete withdrawal had occured during the first year of the 3 year period. (1999 in your example).

For a complete withdrawal in 1999, you want the prior year liability, 12/31/1998. Sometimes the column is worded differently though, and they'll say "complete liability if withdrawal occured on 12/31/1999". Then you take that one, because what they are giving you is the UVB associated with a withdrawal in 1999.

You clear?

[Sandman]

The light dawns. The problems are saying "liability as if a complete withdrawal occurred" which really means it is the liability one year earlier. All becomes clear at last.

Good luck tomorrow, everyone.