Cash Blance & First Year Deduction Limit

[§#$%!]

Took over a first year cb plan (2012) where the interest credit is defined to be actual return on assets.

The resulting deduction limit is far less than the contribution credit since the IC is zero and the Plan does not have a floor other than IC cannot be zero.

Is there a way to increase the deduction limit equal to the contribution credit for 2012?

Tried at-risk but it's not enough. Plus, there's no prior service cost so I have no FT.

Any ideas?

[stbennet]

Remember reading a prior thread discussing this a while back.

http://benefitslink.com/boards/index.php?/topic/47120-funding-target-in-a-cash-balance-plan/

[FAPInJax]

Generally, answer is to use the option under 404(o) to treat the cash balance plan as though it was at risk. This cause the funding to increase because the valuation of the balances is performed at the age of full vesting. NOTE: The acceleration of the first year tends to cause the second year contribution to be reduced. The alternative is to just pick up the difference in the second year when there will be a funding target and therefore a cushion and larger maximum.