Cash Balance

 

 

1.Review or make changes to any cash balance details.

 

2.In Funding Interest Rate, double-click a line from the monthly interest rates table to choose a group of segment rates.  You can also enter segment rates manually below the table.

 

 

3.You must select  to apply changes before leaving the page.

 

 

Will Plan be covered by PBGC:

This is an option if the Plan will be covered by PBGC (Pension Benefit Guaranty Corporation).

 

Cash Balance Interest Credit:

This is the cash balance credit interest to be used in the Plan.

 

FUNDING INTEREST RATE

Interest Rates:  This is the table that shows the monthly values for the average segment rates.

 

Yrs 0-5 Segment 1:

This is the interest rate used for Rate 1 (Years 0-5).

 

Yrs 6-20 Segment 2:

This is the interest rate used for Rate 2 (Years 6-20).

 

Yrs Over 20 Segment 3:

This is the interest rate used for Rate 3 (Years > 20).

 

Pre-Retirement Mortality:

This option allows you to use the pre-retirement mortality computation.

 

Combined Mortality Table:

This option is used if you wish to combined mortality table computation.

 

Funding for Lump Sum:

This option allows you to use the funding for lump sum.

 

Impute Disparity:

This option is used if you wish to impute permitted disparity.

 

ACTURIAL EQUIVALENCE

Pre-Retirement Interest:

This is an interest rate to project a current year contribution to retirement age (testing age). The current regulations stipulate using 7.5% to 8.5% as the allowable interest rate range.

 

Post Retirement Mortality:

Choose a mortality table, which combined with the Post-Retirement Interest Rate, will determine the Annuity Purchase Rate (APR). The APR converts the projected contribution into a benefit in order to test the plan under the 401(a)(4) regulations.

 

Post Retirement Interest:

This is an interest rate that will be used with the selected mortality table. The rate must between 7.5% to 8.5%.

 

TESTING ASSUMPTIONS

Pre-Retirement Interest:

This is an interest rate to project a current year contribution to retirement age (testing age). The current regulations stipulate using 7.5% to 8.5% as the allowable interest rate range.

 

Post Retirement Mortality:

Choose a mortality table, which combined with the Post-Retirement Interest Rate, will determine the Annuity Purchase Rate (APR). The APR converts the projected contribution into a benefit in order to test the plan under the 401(a)(4) regulations.

 

Post Retirement Interest:

This is an interest rate that will be used with the selected mortality table. The rate must between 7.5% to 8.5%.