Cash Balance Credit Formula

[emmetttrudy]

A Plan Sponsor has an age graded schedule set up for their Cash Balance credits which are flat dollar amounts. They would like to change the lowest age group amount to be equal to the 401k deferral limit. For example, the 2012 credit would be $17,000, the 2013 credit would be equal to $17,500, etc. Does anyone see a problem with stating in the Plan Document that this agre group's credit is equal to the 401k deferral limit in effect for that year, as opposed to possibly having to amend the PLan each year the limit changes?

[SoCalActuary]

So long as the document has definitely determinable benefits, you could refer to the maximum permissible deferral limit under a section of the code. Go for it.

[Effen]

I have worked on plans where the cash balance formula referenced the applicable DC limits and never had any problems getting approval letters. As SoCal said, as long as it is definitely determinable, you should be fine.

[emmetttrudy]

Thanks.