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Initial Asset Values

The Initial Asset Values topic pertains to asset and employer contribution information, in general, for the current plan year and fiscal (tax) year or, in a forecast, for the initial (baseline) year. Therefore you provide asset values as of the current:

For guidance, see:

For Funding Assets (in the U.S. qualified mode, ERISA Assets), i.e., asset information used in a funding valuation, enter the Valuation Date (for a forecast, enter the baseline valuation date) and the Market Value (including receivable) of the assets as of that date, or, under the “PPA” law selection in the U.S. qualified mode, the Market Value (including discounted receivable) of the assets as of that date. Generally, an amount receivable is a contribution made for the prior plan year but after the current year valuation date. Include the amount receivable in the funding / ERISA market value but if, for a U.S. single-employer qualified plan, the prior plan year began on or after the plan’s PPA effective date, then discount the receivable contribution(s) with interest (at the prior plan year effective interest rate as defined by PPA) to the valuation date before adding to market value. If the actuarial value of assets is not, by definition, the same as the market value (i.e., you have not selected the market value option as your asset valuation method), be sure to enter the market value here, not the actuarial value.

In the U.S. qualified mode, except for a valuation under the ”PPA” law selection, additional information about ERISA assets is needed, to perform single-employer plan valuations for plan years prior to the effective date of PPA and to perform multiemployer plan valuations. You must enter values, as of the Valuation Date, for the funding standard account (FSA) Credit Balance and the accumulated Reconciliation Account Balance. To determine the minimum required contribution for the current plan year, ProVal will subtract the FSA credit balance from asset values where appropriate and, depending on your methodology for creating new bases, may also utilize the FSA credit balance and/or reconciliation account balance to compute the initial balance of a new base (if any).

In the U.S. qualified mode, also enter the value of any Contribution Carryover, which is an amount contributed prior to the Valuation Date for the prior plan year but not deducted for the prior fiscal (tax) year. Therefore, the amount, presumably, is included in the asset value entered but is not considered an asset for purposes of computing the maximum tax deduction. To determine the maximum tax deductible contribution for the current plan year, ProVal will subtract the carryover amount from the asset value as of the valuation date.

Note: The Valuation Date is used during a Valuation Set or forecast to determine the current plan year. ProVal assumes that the plan year begins on the valuation date, unless the Fraction of year from Valuation Date to end of Plan Year parameter (entered under the Contribution Policy topic, except not applicable in the Canadian registered mode) indicates otherwise, in which case ProVal estimates the first day of the plan year. This is important for ERISA valuations, for which legislated interest rate values depend on the first day of the plan year (for example, current liability interest rates or PPA segment interest rates).

In the Canadian registered mode, a check in the Maintain Prior Year Credit Balance box indicates whether the plan sponsor maintains a credit balance. If a credit balance is maintained, also enter, in the text field, the amount of the credit balance as of the Valuation Date.

For Accounting Assets, i.e., asset information used in an accounting valuation, enter the Measurement Date (which must be on or after the Valuation Date but no more than one year later), the Market Value of the assets (generally, fair value excluding any receivable) and the Contribution Receivable, both as of the Measurement Date. Note that when the fiscal (tax) year is the same as the plan year, the measurement date entered should be the same as the valuation date.

The contribution receivable amount entered is the prior plan year contribution included in the funding asset value but paid after the measurement date and thus excluded from the accounting asset value. If the Measurement Date is after the Valuation Date and the receivable has been paid after the Valuation Date but before the Measurement Date, then the receivable would be included in both the funding and accounting asset values and 0 should be entered for the Contribution Receivable parameter value. Note that, in the U.S. qualified mode, if the Measurement Date is the same as the Valuation Date and an employer contribution schedule is reflected under the Contribution Policy topic, the sum of prior plan year contributions entered in that schedule should equal the amount entered for the Contribution Receivable parameter.

The contribution receivable amount, if any, will be considered for the expected return on assets (in the Valuation Set Exhibit developing expense) and, in a forecast, will be added to the asset value at the end of the current plan year (first year of experience).

In the U.S. qualified mode, for a “PPA” law selection, there is an additional accounting asset value parameter, the ASC 960 Market Value (including receivable). Generally, the value entered, which is used only for the ASC 960 disclosure exhibit (entitled “Statement of PVAB and Reconciliation from Prior Year”), should differ from the value entered for funding assets under the Market Value (including discounted receivable) parameter only by the amount of discount on receivable contribution(s), if any.

In the U.S. qualified mode, for 420 Transfers, i.e. a qualified transfer of excess pension assets from plan funds earmarked for pension benefits to a separate health benefits account to the extent permitted under the provisions of IRC Section 420, enter the Target Amount, which is the desired dollar amount of assets to transfer during the current plan year (in a forecast, the baseline year), subject to the availability of transferable funds. Hence, ProVal might transfer a lesser amount than the target amount or no amount at all, if there are no excess assets at the baseline valuation date. Furthermore, if the target amount exceeds the statutory limits, ProVal will reduce the amount of the assumed actual transfer accordingly. Enter the Fraction of year when transfer will occur, to indicate an approximate date of transfer; for example, for an expected transfer on the valuation date, enter 0 and for an average transfer date a half year after the valuation date, enter 0.5. In a forecast, this date indicates the timing of 420 transfers for forecast years as well as for the baseline year. Generally these parameters do not pertain to transfers made after 2013 or to plan years beginning before 1990 for a single-employer plan or before 2007 for a multiemployer plan. For more information, see the relevant Internal Revenue Service pronouncements, including IRC section 420. To enter 420 transfer amounts for forecast years after the baseline year, see Deterministic Assumptions or Stochastic Assumptions.

In U.S. public pension and OPEB modes, select if Liabilities are calculated as of the Funding assets valuation date or an Earlier date. In all other modes, liabilities are assumed to be calculated as of the Funding assets valuation date. When liabilities are calculated as of the Funding assets valuation date, the valuation date entered should be the same as the valuation date specified in the Valuation(s)/ Core Projection(s) referenced by the Valuation Set/ Deterministic or Stochastic Forecast; otherwise ProVal will warn you but will complete a Valuation Set or forecast that may not produce the intended results. In U.S. public pension and OPEB modes, if liabilities are calculated as of an Earlier date, enter the liability calculation date as a date no earlier than 30 months before the later of the Valuation date or Measurement date. If the entered date does not match the valuation date(s) specified in the Valuation(s)/ Core Projection(s) referenced by the Valuation Set/ Deterministic or Stochastic Forecast, ProVal will abort the run. If the valuation or measurement date is after the date the liabilities are calculated as of, ProVal rolls the liabilities from the date the liabilities are calculated as of forward to the valuation or measurement date; see the Technical Reference article entitled Roll Forward of Liabilities for details.