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  #1  
Old 12-15-2017, 03:57 PM
Kris10vee Kris10vee is offline
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Default Single Employer Amortization Question

1/1/15
funding shortfall = -3,431
All amortization bases are elimated

1/1/16
funding shortfall = 430,011 = shortfall amortization base
new shortfall amortization installment = 71,048

1/1/17
funding shortfall = 7,753
shortfall amortization base = -374,020
new shortfall amortization installment = -61,419

How is the shortfall amortization charge (71,048 - 61,419 = 9,629) larger than the funding shortfall?

I was under the impression that the balance cannot be less than the installment? What am I missing??
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  #2  
Old 12-17-2017, 08:55 PM
DiscreteAndDiscreet DiscreteAndDiscreet is offline
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Quote:
Originally Posted by Kris10vee View Post
1/1/15
funding shortfall = -3,431
All amortization bases are elimated

1/1/16
funding shortfall = 430,011 = shortfall amortization base
new shortfall amortization installment = 71,048

1/1/17
funding shortfall = 7,753
shortfall amortization base = -374,020
new shortfall amortization installment = -61,419

How is the shortfall amortization charge (71,048 - 61,419 = 9,629) larger than the funding shortfall?

I was under the impression that the balance cannot be less than the installment? What am I missing??
Who told you that the balance couldn't be less than the installment?

Offsetting bases of similar periods creating abnormally short or abnormally long effective amortization periods is something that can happen with separate bases amortization with a short base history. The MRC is defined in terms of a methodology that may do this type of thing from time to time. Your situation doesn't sound unreasonable, relative to the range of things that can happen with the post-PPA single employer rules.
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  #3  
Old 12-18-2017, 01:27 PM
Kris10vee Kris10vee is offline
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The software we use to file the schedule SB (Datair) returns an error saying "The absolute value of Schedule SB, Line 32a-Balance is less than absolute value of Schedule SB, Line 32a-Installment"
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Old 12-18-2017, 02:33 PM
DiscreteAndDiscreet DiscreteAndDiscreet is offline
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Ouch, well I can’t find anything in IRC 430 that caps the shortfall amortization at the total shortfall and I haven’t seen that step included in software that calculates the MRC (as written by actuaries who have read the applicable requirements). I do see a cap on installment acceleration amounts with respect to specific bases, but that sounds like a distinctly different calculation processs from the cap implied by your error. I suppose someone could read 430(c)(6) as implying your cap, but I’ve always seen that rule evaluated at an earlier stage of the MRC calculation so that it only applies after the funding target is attained.

I can’t find it now but I’ve seen an xml file online that spells out the validation requirements applied to the Schedule SB XML. Your error may imply that whoever prepared the validation rules thought this rule existed. You may want/need to ask a lawyer or compliance what to do. I’m not sure whether the error message is regulatory guidance.
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  #5  
Old 12-22-2017, 10:56 PM
Mark Cavazos Mark Cavazos is offline
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Quote:
Originally Posted by Kris10vee View Post
The software we use to file the schedule SB (Datair) returns an error saying "The absolute value of Schedule SB, Line 32a-Balance is less than absolute value of Schedule SB, Line 32a-Installment"
Have you asked Datair?
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