FAQ 611: Cash Balance - Partial Distributions

Problem: I have a cash balance plan that paid a partial distribution to one of the participants. What is the best way to enter this information into the system?

Solution: Partial distributions and date information can be entered in the Employee \ Costs \ CASHBAL - Distribution and Distribution Date fields. The system will calculate the partial year interest earned on the distribution based on the distribution date entered and use this information to determine the accrued and projected monthly annuity benefits that reflect the reduction in benefits earned due to the distribution. Some stored accrued benefit fields are reduced by the distribution from the participant's cash balance account while others are not: - The stored value of the Prior Accrued Benefit will not be recalculated. - For BOY valuations, the calculated and stored value of the BOY CB Accrued Benefit and EOY CB Accrued Benefit will be calculated without adjustment for the distribution. No adjustments were made to these benefit calculations in order to preserve consistency in the compliance and benefit statement programs and reports. - For BOY valuations, the calculated and stored value of the Accrued, Begin of Yr. Accrued Benefit, EOY Accrued Benefit, Projected and Funding Projected benefits will be reduced for the distribution annuity amount using funding assumptions (Distribution Funding AccBen). - For EOY valuations, the calculated and stored value of the Begin of Yr. Accrued Benefit, BOY CB Accrued Benefit and EOY CB Accrued Benefit will be calculated without adjustment for the distribution. - For EOY valuations, the calculated and stored value of the Accrued, Projected and Funding Projected benefits will be reduced for the distribution annuity amount using funding assumptions (Distribution Funding AccBen). A participant distribution does not affect the calculation of the target normal cost. Therefore, only the participant's funding target will be affected when a distribution amount and date have been input. Sample calculations of results, including Earnings, Accrued Benefit, PPA Funding Target, and Target Normal Cost, for employees with Cash Balance Distributions from BOY and EOY Valuations can be found in the DB Reference Manual (Help>Manuals>DB Reference Manual, Chapter 3: Cash Balance Plans, Calculating Results for Employees with Cash Balance Distributions) Optionally, you can store the amount and date of a distribution in a participant's Benefits \ SOLEPROP screen \ Distribution for 1099R Export fields. Entries in these fields are not included in valuation calculations and are for recordkeeping and 1099R Reporting only.