change in funding methods

[DMcGovern]

We used to run our DB plans using the individual aggregate method and 30-year treasury rates. Now we have to switch to unit credit and the [blended] segment rates. These changes take what was a fairly predictable, level annual funding requirement and create potential annual funding increases. And, as I understand it (new to this), the funding cushion amount also may be used to decrease future funding requirements. Basically, is this correct?

Would anyone have a spreadsheet using unit credit method that could take a participant(s) age, compensation, segment rates and project out the potential annual increases in the funding requirements (perhaps more data would be needed to do this)? Would it be possible to also include in this spreadsheet the projected effect use of a funding cushion would have on future funding requirements?

Any assistance with this is appreciated!

[tymesup]

We have to calculate the minimum required contribution. As a practical matter, we also have to calculate the maximum deductible contribution. There is no reason you can't do a third calculation for a recommended contribution. If you wanted to use individual aggregate and the 30 year treasury rate, nobody's stopping you, so long as it falls between the minimum and the maximum.

Note that this third calculation could project 415 and 401(a)(17) limits.

[DMcGovern]

Thanks for the reply. I am aware of the minimum and maximums we can run, as well as running the plan under the individual aggregate method to come up with a recommended (more level) funding amount.

Maybe I didn't explain what I'm looking for very well.

I want to show a client, based on a unit credit method, segment rates, and the current year's minimum funding requirement, the projected annual increases in this minimum. And then, if possible, factor in how use of the funding cushion would affect these same future projected funding requirements.