FAQ 444: Pre-PPA Funding Methods - Current liability BOY accrued benefit in EOY valuation


I am running an EOY valuation.

All numbers seem to be calculating correctly. However, the RPA analysis, even though the total as of 12/31/05 is correct, is not being broken down correctly. If you run support page 9a, you get a BOY accrued benefit of $2,885.18 and an expected accrued of $360.65. The true BOY accrued benefit is $2,394.79 (which shows in the participant's detail as prior accrued benefit). Why isn't it being broken down correctly?


The current liability report recalculates the beginning of year accrued benefit by allocating the current accrued benefit over all accrual years (i.e. the increase in the current year is equal to the end of year accrued benefit divided by accrual service at the end of the year). This effectively increases the BOY current liability for 415 limit increases that are "due" on the first day of the current year, and are therefore attributable to prior years rather than current year.