§404 Multi-Employer MDC

Question 1

What is the limit adjustment for a MDC for a multiemployer plan?

Answer 1

Smaller of

1. 10-year amortization of each of the original amounts of the bases considered for 404
2. Actual Amortizations

Question 2

What is the first step of the MDC calc for multiemployer plans?

Answer 2

Greater of:

1. Minimum (amount to settle MFSA including 431 FFL)
2. Normal Cost + Limit Adjustments (if any)

1 gets interest to end of year. 2 gets interest to earlier of end of plan year or fiscal year.

Question 3

Is the NC the same for an Aggregate type method under 404 and 431?

Answer 3

No,

1. the bases could be different
2. 431 would take credit balance out of the assets, but 404 would not take credit balance out of the assets

Question 4

After you take the first step of the MDC, you limit by the FFL. What is the MDC FFL?

Answer 4

Same as 431 Funding Limit, but

1. for the ERISA FFL ignore CB
2. EOY Assets in both limits are reduced by undeducted contributions (i.e. roll assets to end of the year then subtract out undeduted contributions)

Question 5

In the year after the MDC equals the FFL, what happens?

Answer 5

Amortization bases are considered full amortized for section 404 (MDC calcs)

Question 6

What is the final adjustment for the MDC?

Answer 6

Can contribute up to RPA 94 Limit (replacing the 90% with 140%)

Question 7

How does the MDC change for a terminating multiemployer plan?

Answer 7

If plan is covered by PBGC, can deduct the amount necessary to make the plan sufficient for termination.

Question 8

What is a contribution carryover?

Answer 8

An undeducted contribution