Tax Facts

3724 / How are the required annual and quarterly payments to single employer defined benefit plans determined?

Editor’s Note: The CARES Act gave sponsors the option of using the adjusted funding target attainment percentage for the last plan year ending before January 1, 2020.

Contributions to certain defined benefit plans (other than multiemployer or CSEC plans) subject to the minimum funding standard ( Q 3742 to Q 3748) must be made, on an estimated basis, at least quarterly, and the new mortality tables released by the IRS on October 3, 2017 will impact these calculations. The quarterly contribution requirement is imposed on plans with a funding shortfall in the prior year.1

The required amount for each quarterly installment is 25 percent of the Required Annual Payment (“RAP”).2 The RAP is the lesser of the following:

(1)  90 percent of the minimum required contribution amount the employer is required to contribute for the plan year under the minimum funding requirements; and

Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.