| FAQ 911: Cushion Amounts - Calculations for salary increase |
Is there a way to get the system to produce the salary increase cushion amount for the maximum deductible contribution?
To generate the funding target with the "salary increases" calculations simply code the following:
1) Funding \ FUNDMETH - select funding method as 1 - Unit Credit.
2) Funding \ PPAFASMP - code the appropriate Salary scale table in this screen. Code tables in both the non-Principal and Principal fields.
As long as the Funding \ FUNDMETH screen \ Funding Method is set to 1 - Unit Credit, the Funding Target with Salary Increase will be generated for:
- Participants who are not at the 415 compensation limit for the Funding Target calculation and whose funding average compensation is higher than the current average compensation because a salary scale is coded in the Funding \ PPAFASMP screen.
- Participants with a compensation history pattern resulting in a higher funding average compensation than the average compensation used for the Funding Target even if no salary scale has been coded in the Funding \ PPAFASMP screen.
When you run the valuation, the total target liability with salary increases will be stored in the Values \ COSTS screen. The cushion amount reported in the Maximum Deductible Contribution page of the PPA Valuation report will include the Increase in Funding Target due to salary increases.
If you do not want the increase in Funding Target due to salary increase result in your maximum deduction calculation, change Funding \ FUNDMETH screen \ Funding Method to anything other than 1 - Unit Credit.