Cash Balance BOY Valuations

[Hojo]

Does anyone have a problem running beginning of year valuations for Cash Balance Plans?

My funding target keeps getting based on my end of year account balance as a starting value instead of my BOY value......thoughts on how to correctly calculate this?

[FAPInJax]

No. I would prefer EOY valuations but BOY are fine. The funding target is based on the balance in the participant's account as of 12/31/2012 for the 1/1/2013 valuation. The contribution credit expected to be made during 2013 is used for the target normal cost.

I presume you have a daily valued fund which is why the 1/1 value is different from the 12/31 value?

[My 2 cents]

Just remember that the target normal cost will not equal the contribution credit. You have to turn the contribution credit into an expected cash flow and discount that using the funding segment rates.

[Hojo]

My 12/31/2012 and 1/1/2013 CB values are the same, but if I add contribution credits and interest credits as I normally would for the year (as a transaction type), then it calculates the funding target on the 12/31/2013 value instead of the 1/1/2013 value. If I don't put them in the transactions, but put the contribution credit in the allocation and the interest credit in the interest & mortality, it calculates the FT and TNC correctly, but doesn't rollforward my account balances for the next year correctly and I have to hand input them next year......

So what am i missing?

[FAPInJax]

It sounds like maybe the contribution credits and interest credits you are adding are already in the balances and that they are in twice? Normally, on a BOY valuation the contribution and interest credits are for the 2012 year (in your case) because 1/1/2013 is the first time the compensation would be known for the 12/31/2012 allocation.

[Hojo]

It sounds like maybe the contribution credits and interest credits you are adding are already in the balances and that they are in twice? Normally, on a BOY valuation the contribution and interest credits are for the 2012 year (in your case) because 1/1/2013 is the first time the compensation would be known for the 12/31/2012 allocation.

The contribution credits are a flat dollar so they're known for the 2013 plan year already. The interest crediting rate is also known. So basically I'm trying to verify that when I roll this plan to 1/1/2014 the beginning balances are correct as of 1/1/2014 and how to get that done. Right now, it appears that the only way is to roll the valuation and then manually update the balances for each individual. I'm hoping that I'm wrong and that there is something I should be doing in the 2013 plan year, but no one seems to know.