Funding Target

[JBones]

In an end of year valuation, if a participant has an accrued benefit limited by 415 and the prior end of year benefit increases on the first day of the current year due to the COLA increase, is the increase from prior benefit to beginning of year benefit included in the funding target or the target normal cost?

Example:

Participant with 6 years of service/participation and average comp/plan formula benefit in excess of the 415(b) dollar limit.

at 12/31/2008 benefit is $9,250

at 1/1/2009 benefit is $9,750

at 12/31/2009 benefit is $11,375

Am I correct that the funding target be based on $9,750 because it represents benefits that "have been accrued, earned, or otherwise allocated to years of service prior to the first day of the plan year" and the accrual for Target Normal Cost would be based on $1,625 ($11,375 - $9,750)?

[Mike Preston]

Yes, AFAIK.