Unfunded accrued liability

[FAPInJax]

I have a situation where for minimum funding purposes the unfunded accrued liability is not negative. HOWEVER, the unfunded accrued liability is negative for 404 purposes. The reason is a large credit balance.

Is this a legal?? There is an actuary explaining that the prohibition on a negative unfunded accrued liability is for 412 ONLY. I looked at Revenue Ruling 81-213 (the one IRS always seems to reference in answer to this question) and it primarily addresses 412.

Can the unfunded accrued liability be negative for 404 purposes??

Here are some numbers:

Accrued liability 4,000,000

Assets 4,200,000

Credit Balance 500,000

What bases (if any) should be established for the current valuation??

The RR appears to establish a base for 412 equal to 300,000 (Section 7 of the RR).

Now, for 404 is the base a negative 200,000 (maintaining the equation of balance) or zero (this is just one of those situations where the equation does not work).

Thanks for any comments