2009 Instructions For Schedule Sb (Form 5500) Single-Employer Defined Benefit Plan Actuarial Information (Page 3 of 11) in pdf

Note. Under Code section 430(g)(3)(B), the use of averaging

described below. Do not complete line 4 if the plan is not in

methods in determining the value of plan assets is permitted

at-risk status for the current plan year.

•

only in accordance with methods prescribed in Treasury

Line 4a — Enter the amount of the funding target determined

Regulations. Accordingly, for plan years beginning in 2009,

as if the plan were not in at-risk status.

•

taxpayers cannot use asset valuation methods other than fair

Line 4b — Report the funding target disregarding the

market value (as described in Code section 430(g)(3)(A)),

transition rule of ERISA section 303(i)(5) and Code section

except as provided under Notice 2009-22, 2009-14, I.R.B. 741,

430(i)(5), and disregarding the loading factor in ERISA section

Treasury Regulations, and any other published guidance that

303(i)(1)(C) and Code section 430(i)(1)(C).

reflect the amendments made by WRERA. An actuarial value of

If the plan is in at-risk status for the current plan year, attach

assets calculated using the averaging method provided by PPA

a description of the at-risk assumptions for the assumed form of

prior to amendment by WRERA (which does not reflect

payment (i.e., the optional form resulting in the highest present

expected earnings) is not permitted for the plan year that begins

value). Label the attachment “Schedule SB, line 4 –

in 2009, regardless of whether that method was used to

Additional Information for Plans in At-Risk Status.”

determine the actuarial value of assets for the plan year

Line 5. Effective Interest Rate. Enter the single rate of

beginning in 2008.

interest which, if used instead of the interest rate(s) reported in

Line 3. Funding Target/Participant Count Breakdown. All

line 21 to determine the present value of the benefits that are

amounts should be reported as of the valuation date.

taken into account in determining the plan’s funding target for a

•

Column (1) — Enter the number of participants, including

plan year, would result in an amount equal to the plan’s funding

beneficiaries of deceased participants, who are or who will be

target determined for the plan year, without regard to

entitled to benefits under the plan.

calculations for plans in at-risk status. (This is the funding target

•

Column (2) — Enter the funding target calculated using the

reported in line 3d(2) for plans not in at-risk status, or in line 4a

methods and assumptions provided in ERISA sections 303(h)

for plans in at-risk status.) However, if the funding target for the

and (i), Code sections 430(h) and (i), and other related

plan year is zero, the effective interest rate is determined as the

guidance. When allocating the funding target for active

single rate that would result in an amount equal to the plan’s

participants (line 3c(3)) between vested and non-vested

target normal cost determined for the plan year, without regard

benefits (lines 3c(2) and 3c(1) respectively), benefits

to calculations for plans in at-risk status. See the provisions of

considered vested for PBGC premium purposes must be

Code section 430(h)(2)(A), ERISA section 303(h)(2)(A), and the

included in line 3c(2).

applicable regulations. Enter rate to the nearest .01% (e.g.,

Unless the plan sponsor has received approval to use

5.26%).

substitute mortality tables in accordance with ERISA section

Line 6. Target Normal Cost. Report the present value of all

303(h)(3)(C) and Code section 430(h)(3)(C), the funding target

benefits which have been accrued or have been earned (or that

must be computed using the mortality tables for non-disabled

are expected to accrue or to be earned) under the plan during

lives, as published in section 1.430(h)(3)-1 of the Income Tax

the plan year, increased by any plan-related expenses

Regulations. If substitute mortality tables have been approved

expected to be paid from plan assets during the plan year, and

(or deemed to have been approved) by the IRS, such tables

decreased (but not below zero) by any mandatory employee

must be used instead of the mortality tables described in the

contributions expected to be made during the plan year. Include

previous sentence, subject to the rules of ERISA section

any increase in benefits during the plan year that is a result of

303(h)(3) and Code section 430(h)(3). The funding target may

any actual or projected increase in compensation during the

be computed taking into account the mortality tables for

current plan year, even if that increase in benefits is with

disabled lives published in Rev. Rul. 96-7, 1996-1 C.B. 59, and

respect to benefits attributable to services performed in a

as provided in Notice 2008-29, 2008-12 I.R.B. 637.

preceding plan year.

Special rules for plans that are in at-risk status. If a plan

This amount must generally be calculated as of the valuation

is in at-risk status, report the amount reflecting the additional

date and must be based on the same assumptions used to

assumptions required in ERISA section 303(i)(1)(B) and Code

determine the funding target reported in line 3c(3), column (2),

section 430(i)(1)(B).

reflecting the special assumptions and the loading factor for

If the plan has been in at-risk status for any two or more of

at-risk plans, if applicable. If the plan is in at-risk status and has

the preceding four plan years, also include the loading factor

been for fewer than five consecutive years, report the target

required in ERISA section 303(i)(1)(C) and Code section

normal cost after reflecting the transition rule provided in ERISA

430(i)(1)(C). If the plan is in at-risk status and has been in

section 303(i)(5) and Code section 430(i)(5).

at-risk status for fewer than five consecutive years, report the

Special rule for airlines using 10-year amortization

funding target amounts after reflecting the transition rule

period under section 402(a)(2) of PPA. Section 402(a)(2) of

provided in ERISA section 303(i)(5) and Code section 430(i)(5).

PPA (as amended by section 6615 of the U.S. Troop

Years beginning before 2008 do not count for this purpose.

Readiness, Veterans’ Care, Katrina Recovery, and Iraq

Thus, for example, the funding target for a plan that was in

Accountability Appropriations Act, 2007, Public Law 110-28

at-risk status for both the 2008 and 2009 plan years will reflect

(121 Stat.112)) states that for plans electing the 10-year

40% of the funding target using the special at-risk assumptions

amortization period, the funding target during that period is

and 60% of the funding target determined without regard to the

determined using an interest rate of 8.25% rather than the

at-risk assumptions.

interest rates or segment rates calculated on the basis of the

Determining whether a plan is in at-risk status. Refer to

corporate bond yield curve. However, this special 8.25%

ERISA section 303(i)(4) and Code section 430(i)(4) to

interest rate does not apply for other purposes, including the

determine whether the plan is in at-risk status. Generally, a plan

calculation of target normal cost or the amortization of the

is in at-risk status for a plan year if it had more than 500

funding shortfall. Report the target normal cost using the

participants on any day during the preceding plan year (see

interest rates or segment rates otherwise applicable under

instructions for line F for the definition of participants) and the

Code section 430(h)(2) and ERISA section 303(h)(2).

plan’s funding target attainment percentage (“FTAP”) falls

Specific Instructions for Part II — Beginning of

below specified thresholds.

Year Carryover and Prefunding Balances

A plan with over 500 participants is in at-risk status for 2009

if the FTAP for 2008 (line 14 of the 2008 Schedule SB) is less

Line 7. Balance at Beginning of Prior Plan Year After

than 70%.

Applicable Adjustments. In general, report the amount in the

Line 4. Additional Information for Plans in At-Risk Status.

corresponding column of line 13 of the prior-year Schedule SB.

If the plan is in at-risk status as provided under ERISA section

However, if the balance from the prior year has been adjusted

303(i)(4) and Code section 430(i)(4), check the box, complete

so that it does not match the corresponding amount in line 13 of

lines 4a and 4b, and include as an attachment the information

the prior-year Schedule SB, attach an explanation and label the

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Instructions for Schedule SB (Form 5500)

2009 Instructions For Schedule Sb (Form 5500) Single-Employer Defined Benefit Plan Actuarial Information Page 3

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