Alternative Minimum Funding Standard Account:   A worksheet must be attached if the alternative minimum funding standard account is used and be labeled, Schedule B, line 8b - Alternative Minimum Funding Standard Account. The worksheet should show:

1. The prior year alternate funding deficiency (if any).
2. Normal cost.
3. Excess, if any, of the value of accrued benefits over the market value of assets.
4. Interest on 1, 2, and 3 above.
5. Employer contributions (total from columns (b) of line 3 of Schedule B).
6. Interest on 5 above.
7. Funding deficiency: if the sum of 1 through 4 above is greater than the sum of 5 and 6 above, enter the difference.

If the entry age normal cost method was not used as the valuation method, the plan may not switch to the alternative minimum funding standard account for this year. Additionally, in line 3 of the worksheet, the value of accrued benefits should exclude benefits accrued for the current plan year. The market value of assets should be reduced by the amount of any contributions for the current plan year.

Reorganization Status:   Attach an explanation of the basis for the determination that the plan is in reorganization for this plan year and label the explanation, Schedule B, line 8b - Reorganization Status Explanation. Also, attach a worksheet showing for this plan year:

1. The amounts considered contributed by employers,
2. Any amount waived by the IRS,
3. The development of the minimum contribution requirement (taking into account the applicable overburden credit, cash-flow amount, contribution bases and limitation on required increases on the rate of employer contributions), and
4. The resulting accumulated funding deficiency, if any, which is to be reported on line 9p.

Label the worksheet, Schedule B, line 8b - Reorganization Status Worksheet.

Line 8c.   All multiemployer plans check No. Plans other than multiemployer plans check Yes only if the plan is covered by Title IV of ERISA.

If line 8c is Yes, attach a schedule of the active plan participant data used in the valuation for this plan year. Use the same size paper as the Schedule B and the format shown above and label the schedule Schedule B, Line 8c - Schedule of Active Participant Data.

Expand this schedule by adding columns after the 5 to 9 column and before the 40 & up column for active participants with total years of credited service in the following ranges: 10 to 14; 15 to 19; 20 to 24; 25 to 29; 30 to 34; and 35 to 39. For each column, enter the number of active participants with the specified number of years of credited service divided according to age group. For participants with partial years of credited service, round the total number of years of credited service to the next lower whole number.

Plans reporting 1,000 or more active participants on line 2b(3) must also provide average compensation data. For each grouping, enter the average compensation of the active participants in that group. For this purpose, compensation is the compensation taken into account for each participant under the plan's benefit formula, limited to the amount defined under section 401(a)(17) of the Code. Years of credited service are the years credited under the plan's benefit formula. Do not enter the average compensation in any grouping that contains fewer than 20 participants.

If the plan is a multiple-employer plan, complete one or more schedules of active-participant data in a manner consistent with the computations for the funding requirements reported on line 9. See the specific instructions for Lines 9a through 9q. For example, if the funding requirements are computed as if each participating employer maintained a separate plan, attach a separate schedule for each participating employer in the multiple-employer plan.

Line 9. Shortfall Method.   Under the shortfall method of funding, the normal cost in the funding standard account is the charge per unit of production (or per unit of service) multiplied by the actual number of units of production (or units of service) that occurred during the plan year. Each amortization installment in the funding standard account is similarly calculated.

Lines 9a through 9q. Multiple Employer Plans.   If the plan is a multiple employer plan subject to the rules of Code section 413(c)(4)(A) for which minimum funding requirements are to be computed as if each employer were maintaining a separate plan, complete one Schedule B for the plan. Also submit an attachment completed in the same format as lines 9a through 9q showing, for this plan year, for each individual employer maintaining the plan, the development of the minimum contribution requirement and label the attachment, Schedule B, lines 9a through 9q - Development of Minimum Contribution Requirement for Each Individual Employer (taking into account the applicable normal cost, amortization charges and credits, and all other applicable charges or credits to the funding standard account that would apply if the employer were maintaining a separate plan). Compute the entries on Schedule B, except for the entries on lines 9a, 9h, 9o, and 9p, as the sum of the appropriate individual amounts computed for each employer. Compute the entry on line 9a as the sum of the prior year's funding deficiency, if any, for each individual employer and the entry on line 9p as the sum of the separately computed funding deficiency, if any, for the current year for each employer. Credit balance amounts on lines 9h and line 9o are separately computed in the same manner. (Note that it is possible for the Schedule B to show both a funding deficiency and a credit balance for section 413(c) plans. This could not appear for other plans.)

Lines 9c and 9j. Amortization Charges and Credits.   If there are any amortization charges or credits, attach a maintenance schedule of funding standard account bases, and label the schedule, Schedule B, lines 9c and 9j - Schedule of Funding Standard Account Bases. The attachment should clearly indicate the type of base (i.e., original unfunded liability, amendments, actuarial losses, etc.), the outstanding balance of each base, the number of years remaining in the amortization period, and the amortization amount. If bases were combined in the current year, the attachment should show information on bases both prior to and after the combining of bases.

The outstanding balance and amortization charges and credits must be calculated as of the valuation date for the plan year.

Line 9c(1). 165% Current Liability Full Funding Limitation Base.   If a credit was entered on line 9l(5) on the prior year's Schedule B, establish a new base equal to the amount of the credit (increased with interest to the current valuation date at the valuation rate) and amortize the base over a 20-year period at the valuation rate.

Note.   No current liability full funding limitation bases are established under the funding methods that do not provide for amortization bases (see Q&A-3 of Rev. Rul. 2000-20, 2000-16 I.R.B. 880).

Line 9c(2).   Amortization for funding waivers must be based on the interest rate provided in Section 412(d) (mandated rate).

Line 9d. Interest as Applicable.   Interest as applicable should be charged to the last day of the plan year. The mandated rates must be used when calculating interest on any amortization charges for funding waivers.

Line 9e.   If the funded current liability percentage for the preceding year reported in line 4a is at least 100%, quarterly contributions are not required for the current plan year.

Interest is charged for the entire period of underpayment. Refer to IRS Notice 89-52, 1989-1 C.B. 692, for a description of how this amount is calculated.

Note.   Notice 89-52 was issued prior to the amendment of section 412(m)(1) by the Revenue Reconciliation Act of 1989. Rather than using the rate in the Notice, the applicable interest rate for this purpose is the greater of:

1. 175% of the Federal mid-term rate at the beginning of the plan year, or
2. The rate used to determine the RPA '94 current liability.

All other descriptions of the additional interest charge contained in Notice 89-52 still apply.

Line 9f.   Enter the required additional funding charge from line 12q. Check N/A if line 12 is not applicable.

Line 9h.   Note that the credit balance or funding deficiency at the end of Year X should be equal to the credit balance or funding deficiency at the beginning of Year X+1. If such credit balances or funding deficiencies are not equal, attach an explanation and label the attachment, Schedule B, line 9h - Explanation of Prior year Credit Balance/Funding Deficiency Discrepancy. For example, if the difference is because contributions for a prior year that were not previously reported are received this plan year, attach a listing of the amounts and dates of such contributions.

Line 9l(1). ERISA Full Funding Limitation.   Instructions for this line are reserved pending published guidance.

Line 9l(2). 165% Current Liability Full Funding Limitation.   Instructions for this line are reserved pending published guidance.

Line 9l(3). RPA '94 Override.   Instructions for this line are reserved pending published guidance.

Line 9l(4). Full Funding Credit before reflecting OBRA '87 Full Funding Limitation.   Enter the excess of (1) the accumulated funding deficiency, disregarding the credit balance and contributions for the current year, if any, over (2) the greater of lines 9l(1) or 9l(3).

Line 9l(5). Additional Credit due to OBRA '87 Full Funding Limitation.   Enter (1) the excess, if any, of the accumulated funding deficiency, disregarding the credit balance and contributions for the current plan year, over the greater of lines 9l(2) or 9l(3), minus (2) the amount in line 9l(4). If the result is negative, enter zero.

Line 9m(1). Waived Funding Deficiency Credit.   Enter a credit for a waived funding deficiency for the current plan year (Code section 412(b)(3)(C)). If a waiver of a funding deficiency is pending, report a funding deficiency. If the waiver is granted after Form 5500 is filed, file an amended Form 5500 with an amended Schedule B to report the funding waiver (see page 6 of the Instructions for Form 5500).

Line 9m(2). Other Credits.   Enter a credit in the case of a plan for which the accumulated funding deficiency is determined under the funding standard account if such plan year follows a plan year for which such deficiency was determined under the alternative minimum funding standard.

Line 9q. Reconciliation Account.   The reconciliation account is made up of those components that upset the balance equation of Treasury Regulation section 1.412(c)(3)-1(b). Valuation assets should not be adjusted by the reconciliation account balance when computing the required minimum funding.

Line 9q(1).   The accumulation of additional funding charges for prior plan years must be included. Enter the sum of line 9q(1) (increased with interest at the valuation rate to the first day of the current plan year) and line 9f, both from the prior year's Schedule B (Form 5500).

Line 9q(2).   The accumulation of additional interest charges due to late or unpaid quarterly installments for prior plan years must be included. Enter the sum of line 9q(2) (increased with interest at the valuation rate to the first day of the current plan year) and line 9e, both from the prior year's Schedule B (Form 5500).

Line 9q(3)(a).   If a waived funding deficiency is being amortized at an interest rate that differs from the valuation rate, enter the prior year's reconciliation waiver outstanding balance increased with interest at the valuation rate to the current valuation date and decreased by the year end amortization amount based on the mandated interest rate. Enter the amounts as of the valuation date.

Line 9q(4).   Enter the sum of lines 9q(1), 9q(2), and 9q(3)(b) (each adjusted with interest at the valuation rate to the current valuation date, if necessary).

Note.   The net outstanding balance of amortization charges and credits minus the prior year's credit balance minus the amount on line 9q(4) (each adjusted with interest at the valuation rate, if necessary) must equal the unfunded liability.

Line 10. Contribution Necessary to Avoid Deficiency.   Enter the amount from line 9p. However, if the alternative funding standard account is elected and the accumulated funding deficiency under that method is smaller than line 9p, enter such amount (also see instructions for line 8b). For multiemployer plans in reorganization, see the instructions for line 8b. File Form 5330 with the IRS to pay the 10% excise tax (5% in the case of a multiemployer plan) on the funding deficiency.

Line 11.   In accordance with ERISA section 103(d)(3), attach a justification for any change in actuarial assumptions for the current plan year and label the attachment, Schedule B, line 11 - Justification for Change in Actuarial Assumptions. The preceding sentence applies for all plans.

The following instructions are applicable only to changes in current liability assumptions for plans (other than multiemployer plans) subject to Title IV of ERISA that resulted in a decrease in the unfunded current liability (UCL). If the current liability assumptions (other than a change in the assumptions required under Code section 412(l)(7)(C)) were changed for the current plan year and such change resulted in a decrease in UCL, approval for such a change may be required. However, if one of the following three conditions is satisfied with respect to a change in assumptions for a plan year, then the plan sponsor is not required to obtain approval from the IRS for such change(s):

Condition 1: Aggregate Unfunded Vested Benefits  

The aggregate unfunded vested benefits as of the close of the plan year preceding the year in which assumptions were changed (as determined under section 4006(a)(3)(E)(iii) of ERISA) for the plan, and all other plans maintained by contributing sponsors (as defined in section 4001(a)(13) of ERISA) and members of such sponsor's controlled group (as defined in section 4001(a)(14) of ERISA) which are covered by Title IV of ERISA (disregarding plans with no unfunded vested benefits) is less than or equal to $50 million.

Condition 2: Amount of Decrease in UCL  

The change in assumptions (other than a change required under Code section 412(l)(7)(C)) resulted in a decrease in the UCL of the plan for the plan year in which the assumptions were changed of less than or equal to $5 million.

Condition 3: Amount of Decrease in UCL, and CL Before Change in Assumptions  

Although the change in assumptions (other than a change required under Code section 412(l)(7)(C)) resulted in a decrease in the UCL of the plan for the plan year in which the assumptions were changed which was greater than $5 million and less than or equal to $50 million, the decrease was less than five percent of the current liability of the plan before such change.

If the current liability assumptions for the plan have been changed, and such change requires approval of the Service, enter on an attachment the date(s) of the ruling letter(s) granting approval and label the attachment, Schedule B, line 11 - Change in Current Liability Assumptions Approval Date.

If the current liability assumptions for the plan have been changed, and such change would have required approval in the absence of satisfaction of one of the conditions outlined above, enter on an attachment the number of the applicable condition and the plan year for which it applies and label the attachment, Schedule B, line 12a - Change in Current Liability Applicable Condition. If condition 1 or 2 applies, also enter the amount of the decrease in UCL. Note that only one of the conditions needs to be entered.

Specific Instructions for Part II

Line 12. Additional Required Funding Charge.   There is no additional funding charge for plans that have 100 or fewer participants in the prior plan year (as defined under the Who Must File discussion for Schedule B). Do not complete Part II for such plans.

Line 12a.   A plan's Gateway % is equal to the actuarial value of assets (line 1b(2), unreduced by any credit balance) divided by the current liability computed with the highest allowable interest rate (line 1d(2)(c)). If line 1d(2)(c) is not completed in accordance with instructions for that line, use RPA '94 current liability reported on line 1d(2)(a). There is no additional funding charge for plan years beginning in 2002 if the Gateway % is at least 90%. In such cases, enter -0- on line 12q. There is no additional funding charge for plan years beginning in 2002 if

1. the Gateway % (for 2002) is at least 80% but less than 90%, and
2. the Gateway % for the plan years beginning in 2001 and 2000 were at least 90%, or, the Gateway % for the plan years beginning in 2000 and 1999 were at least 90% (in such case, enter -0- on line 12q).

Note.   Section 1508 of TRA '97 provided transition rules for certain plans sponsored by companies engaged primarily in the interurban or interstate passenger bus service that have Gateway percentages that are greater than certain prescribed minimum percentages. These transition rules are effective for such plans for any plan year beginning after 1996 and before 2010. If one of these transition rules is used, line 12a should be completed, and, if appropriate, a zero should be entered in line 12q. Attach a demonstration of the use of this transition rule to the Schedule B and label the attachment, Schedule B, line 12a - Transition Rule.

Line 12c.   Enter the actuarial value of assets (line 1b(2)), reduced by the prior year's credit balance (line 9h). If line 9h was determined at a date other than the valuation date, adjust the credit balance for interest at the valuation rate to the current valuation date before subtracting. Do not add a prior year's funding deficiency to the assets.

Line 12d. Funded Current Liability Percentage.   Enter the actuarial value of the assets expressed as a percentage of RPA '94 current liability. Enter the result to the nearest .01% (e.g., 28.72%).

Line 12f.   Enter the liability for any unpredictable contingent event (other than events that occurred before the first plan year beginning after 1988) that was included in line 12b, whether or not such unpredictable contingent event has occurred.

Line 12g.   Enter the outstanding balance of the unfunded old liability as of the valuation date. This is line 12(g) of the 2001 Schedule B reduced by the prior year's amortization amount, and adjusted for interest at the prior year's current liability interest rate from the prior year's valuation date to the current valuation date. The unfunded old liability (and therefore all its components) will be considered fully amortized in accordance with Q&A-7 of Rev. Rul. 96-20, 1996-1 C.B. 62.

Note.   In the case of a collectively bargained plan, this amount must be increased by the unamortized portion of any unfunded existing benefit increase liability in accordance with Code section 412(l)(3)(C).

Line 12h.   This amount is the unfunded new liability. It is recomputed each year. If a negative result is obtained, enter zero.

Line 12i.   If the unfunded new liability is zero, enter zero for the unfunded new liability amount. If the unfunded new liability is greater than zero, first calculate the amortization percentage as follows:

1. If the funded current liability percentage (line 12d) is less than or equal to 60%, the amortization percentage is 30%.
2. If the current liability percentage exceeds 60%, the amortization percentage is determined by reducing 30% by the product of 40% and the amount of such excess. Enter the resulting amortization percentage to the nearest 0.01 percent.

The unfunded new liability amount is equal to the above-calculated percentage of the unfunded new liability.

Line 12j.   Enter the amortization amount for line 12g based on the RPA '94 current liability interest rate (line 6a(1)) in effect for the plan year and the following amortization period:

In general:   For the 2002 plan year, the remaining amortization period is 5 years.

Special rule:   In the case of a collectively bargained plan, the amortization amount must be increased by the amortization of any unfunded existing benefit increase liability in accordance with Code section 412(l)(3)(C)(ii). For any such amortization, the amortization period is equal to the remainder of the original 18-year period that applied when the amortization began.

Base maintenance:   On a separate attachment, show the initial amount of each DRC amortization base (as defined in Rev. Rul. 96-20) being amortized under the general or special rule, the outstanding balance of each DRC amortization base, the number of years remaining in the amortization period, and the amortization amount (with the valuation date as the due date of the amortization amount), and label the schedule, Schedule B, line 12j - Schedule of DRC Bases. It is not necessary to list separately the unfunded old liability base and the additional unfunded old liability base.

Line 12l.   Enter the result determined by subtracting the amortization credits (line 9j) from the sum of the normal cost and the amortization charges (lines 9b, 9c(1) and 9c(2)). Use the valuation date as the due date for the amortization amounts. If entering a negative number, enter a minus sign - to the left of the number.

Line 12m. Unpredictable Contingent Event Amount.   Line 12m does not apply to the unpredictable contingent event benefits (and related liabilities) for an event that occurred before the first plan year beginning after December 31, 1988.

Line 12m(1).   Enter the total of all benefits paid during the plan year that were paid solely because an unpredictable event occurred.

Line 12m(4). Amortization of All Unpredictable Contingent Event Liabilities.   Amortization should be based on the RPA '94 current liability interest rate (line 6a(1)), using the valuation date as the due date. The initial amortization period for each base established in a plan year is generally 7 years, however see Code section 412(l)(5) for special rules.

Note.   An alternative calculation of an unpredictable contingent amount is available for the first year of amortization. Refer to Code section 412(l)(5)(D) for a description. If this alternative calculation is used, include an attachment describing the calculation, and label the schedule, Schedule B, line 12m(4) - Alternative UCEB Calculation.

Line 12m(5). RPA '94 Additional Amount.   Subtract line 12g from line 12e. If the result is zero or less than zero, enter -0-. If the result is a positive number, multiply the result by the percentage used to calculate line 12i. Enter the excess, if any, of this amount over the amount on line 12i.

Line 12n. Preliminary charge.   Adjust with interest using the RPA '94 current liability interest rate.

Line 12o. Contributions needed to increase current liability percentage to 100%.   This amount is equal to the excess, if any, of the adjusted current liability over the adjusted assets. The adjusted current liability is equal to the excess of (1) the sum of lines 1d(2)(a) and 1d(2)(b), over (2) line 1d(2)(d), each adjusted to the end of the plan year using the RPA '94 current liability interest rate. Note that a special rule under Code section 412(l)(7)(C)(i)(III) allows a rate up to 120% to be substituted for 105% for the 2002 plan year.

The adjusted assets are equal to the actuarial value of assets for the plan year adjusted by

1. subtracting any credit balance (or adding any debit balance) in the plan's funding standard account as of the end of the prior plan year, adjusted with interest to the valuation date at the valuation interest rate,
2. subtracting the disbursements from the plan (including single sum distributions) expected to be paid after the valuation date but prior to the end of the plan year,
3. adding the charges to the funding standard account as maintained under Code section 412(b) for the plan year (other than the additional funding charge under Code section 412(l)), and
4. 4 subtracting the credits to the funding standard account as maintained under Code section 412(b) for the plan year (other than credits under Code sections 412(b)(3)(A) and 412(b)(3)(C)).

The actuarial value of assets and the adjustments described above are determined as of the valuation date, and each is appropriately adjusted with interest to the end of the plan year at the valuation interest rate. The result of the calculation of adjusted assets may be a negative number.

Line 12q.   If the plan had 150 or more participants on each day of the preceding plan year, enter 100%. If the plan had less than 150 participants but more than 100 participants on each day of the preceding plan year, enter the applicable percentage. The same participant aggregation rule described in the instructions for line 12 applies. The applicable percentage is calculated as follows:

1. Determine the greatest number of participants on any day during the preceding plan year in excess of 100.
2. The applicable percentage is 2% times the number of such participants in excess of 100.

The percentage should not exceed 100%. The amount on line 12q is also the amount entered on line 9f.

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