Market Rate of Return Cash Balance Plans

If a plan has the Rate of Return pegged to something like the S&P500, and the S&P goes down 20% in 2025, but then goes up 10% in 2026 , what happens to participant hypothetical accounts?  For example, if someone's hypothetical account was $10,000 on 1/1/2025, it stays at $10,000 through 12/31/2025 because the benefit can never go down.  My big question is will there account still be at $10,000 at 12/31/2026, because the 10% return in 2026 was not enough to make up for the losses in 2025? i.e., is it a cumulative tracking?  Or is the ROR always just pegged to the ROR specified in the doc for that year, with all prior returns (or losses) ignored? 

First, I did not think you could tie your ICR to an equity index like the S&P500 but had to tie it to a specific S&P500 index fund.

Second, as John stated, it is cumulative. The account balance goes up or down annually per the ICR and can and will be negative until such time as it gets paid out.

Assuming future pay credits of $10,000, a 12/31/2024 first year balance of $10,000 has negative interest of $2,000 after the 20% loss and gets $10,000 pay credit at 12/31/2025 for balance of $18,000. 10% gain in 2026 yields interest credit of $1,800 and $10,000 pay credit makes balance $29,800 at 12/31/2026, and so on. However, if this person left and was getting paid out, they would get $30,000 ($10,000 x 3 years) - unless the plan has defined ICR floor as may be permitted by the regulations, as John noted.