cash balance plan calculation

[Gary]

If a cash balance planuses interest credit equal to the actual return on assets and the plan experiences say a 15% return for the year, does that mean that for funding purposes the participants' accounts are increased by 15% per year right up until ARA?

Ironically a high rate of return can result in higher funding target and target normal costs.

thanks

[Guest Quagmire]

If a cash balance planuses interest credit equal to the actual return on assets and the plan experiences say a 15% return for the year, does that mean that for funding purposes the participants' accounts are increased by 15% per year right up until ARA?

Ironically a high rate of return can result in higher funding target and target normal costs.

thanks

The cash balance increase assumption should be chosen by the actuary in accordance with ASOP 27, and represent the actuary's long-term expectation, not the most immediate year's result.