Short plan year unit credit

[FAPInJax]

A plan has a short year 7/1 to 12/31 and will have full calendar plan years thereafter. The actuary elects to use the unit credit funding method. The accrued benefit at the end of the period is 100 and the beginning is zero. Can the entire 100 be used in the normal cost OR must it be prorated for the short plan year? It would seem logical to fund for the 100 so assets equal liabilities at the end of the year (no gain / loss going forwards) - otherwise funding 50 would produce an immediate loss on the 1/1 valuation following. Am I missing something or is there a Revenue Ruling dealing with the short plan problem?

Thanks in advance.

[SoCalActuary]

A little more info please.

In the first plan year, is the limitation year also prorated? I doubt it, but I don't know what's in your document.

[FAPInJax]

Let's for the sake of argument say the limitation year is NOT prorated.

[JAY21]

I've never seen a Rev. Ruling or the like on this question but have ran into it before. In my case the plans were usually career average comp plans with comp from date of plan entry so the short plan year was generally also a short compensation period (comp defined on a annual basis) so you were already dealing with only 6 months of comp so that applying an additional pro-ration seemed like a double-reduction. Thus, in your example we'd fund for the full 100.

Howver, I suspect the best you can hope for here is a grey book Q&A if one exists, at least I've looked but never found any thing definitive on this.