Overfunded one man plan and PPA maximum deduction

[Guest DCquestioner]

I know that there are no regs for maximum deductions under PPA, but I have an interesting situation.

A one man DB plan is significantly overfunded. Selected results as follows:

Target Normal Cost: $12,000 (because of significant credit balance, TNC is only partially offset due to funding surplus).

Carry over balance: $138,000

Undeducted contributions from 2007: $56,000

404(o) maximum: $0 (this is from the TNC + FT + cushion amount less assets

If I don't use the credit balance to offset my minimum required contribution under 430, and I made the $12,000 contribution, it would be deductible. So even though I have undeducted contributions in my plan, I still have the ability to contribute and deduct a $12,000 contribution? If I didn't offset the minimum by the credit balance, I would have an obligation to make a contribution under 430, so there's no way for me to apply any of the undeducted contributions towards meeting this minimum.

Am I going crazy, or is there something that's just wrong about this situation?