Target Normal Cost Used in Calculation of Maximum

[Pension RC]

I am doing a 2013 valuation for a one-man DB plan. As expected, my valuation system is producing a funding target used for the maximum that is larger than the MAP-21 funding target. However, it is calculating a target normal cost for the the maximum that is LOWER than the MAP-21 target normal cost. How is this possible, if the all of the MAP-21 segment rates are higher than the segment rates used for maximum purposes?

Any thoughts would be appreciated!

[david rigby]

Just a guess: Are you including expenses in the 430 NC but excluding them from the 404 NC?

[Pension RC]

Good thought. I checked and that's not the difference. Thanks.

[My 2 cents]

Are you assuming payment as a lump sum? Perhaps the 404 calculation, with a higher funding target, comes close enough to the 415 limit based on the fixed interest rate applicable to the 415 lump sum limit, to limit the amount that can still be accrued. The lower funding target under MAP-21 rates would leave a larger margin. Just guessing.