FAQ 923: Cushion Amounts - Limiting for HCE amendments in prior 2 years

Problem: My DB Plan was amended in 2023 increasing the benefits of the owners. I am doing my 1/1/2024 valuation. In determining the maximum deductible contribution, how do I code ASC so that the cushion amount is limited for owners to the pre-2023 amendment benefit values?

Solution: Valuation calculations haven't yet been programmed for this, but if, after you have run valuation calculations, you enter a value in the "HCE Amendments Prior 2 Years" field on the Costs > CONTRIB screen, the Maximum Deductible Contribution report will subtract the amount entered from the maximum funding target to determine the cushion amount. To have the system calculate the value, make a copy of the case, and input the prior formula for the HCEs and the current formula for the NHCEs. This can be done using Table Maintenance DB/CB formula tables. Run Calculations Valuation. The maximum page in the PPA report should give you the correct cushion amount and maximum contribution. The difference between the Funding Target on this report page and the one on the page from your original case report can be entered on the Costs>Contribution screen of Plan Specifications as "HCE Amendments Prior 2 Years" in the original case. You should now be able to print the entire PPA valuation report from the original case.