cross tested cash balance assumptions

[abanky]

I know that we've gone over this before, but I need a little refresher... do I have to use AE as my assumptions in the testing of a cross tested cb plan or can I use reasonable assumptions?

[Effen]

What exactly is a "cross tested cash balance" plan? Since a cash balance plan is a defined benefit plan, if you are "cross testing" it, are you testing based on contributions?

[abanky]

sorry, i guess crossed tested is the wrong term...

Yes, I'm testing based on contributions.

[AndyH]

If you are doing a normal general test on either benefits or allocations, you convert the balances to accrued benefits using AE assumptions, then test using "standard" testing assumptions contained in 1.401(a)(4).

If, however, you are using the "modified safe harbor" test in the CB section of 1.401(a)(4), I think you simply test the allocations as if they were DC allocations.

[Effen]

Also, don't forget about most valuable accrual rates which most (but not all) would argue should be based on the immediate lump sum and the immediate annuity option.