FAQ 832: Cash Balance - Interest Credit for EOY valuations


How is the cash balance account interest credit calculated for an end of year valuation?


The interest credit is calculated in the "Update to New Period" routine using the Current Interest Rate on the CASHBAL assumptions screen in the file being updated. However, if the Current Interest Rate in the current year differs from the value in the Prior Interest Rate field, the program will recalculate the interest credit during the valuation process using the rate in the Current Interest Rate field.

This recalculation is not necessary for a beginning of year valuation as the Current Interest Rate in the file being updated is the correct rate for crediting account balances in those plans.