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Old 11-03-2008, 09:18 PM
Actiger Actiger is offline
Join Date: May 2007
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Originally Posted by student_actuary View Post
Im trying to calculate the Pre-funding balance as at 01/01/2009. For this we need to calculate the "excess" of actual 2008 contribution made over required 2008 contribution as at 01/01/2008 and then carry that forward to 1/1/2009 by giving it interest at the rate of return on 2008 assets.
NO!! There's no prefunding balance as of 1/1/2008!!

You carry forward the "excess contributions" (not prefunding balances) with the effective interest rate to 1/1/2009. Whatever excess you have as of 1/1/2008 doesn't create prefunding balance until 1/1/2009. Any leftover credit balances after applying towards MRC are credited with the rate of return on assets.

Say you have prefunding balance left after applying towards MRC determined as of 1/1/2009. You also made contributions in excess of MRC. Then you carry forward the leftover prefunding balance to 1/1/2010 using the rate of return on assets, and the excess contribution accrues interest at the effectve rate to 1/1/2010. Hope this helps.
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balances, ea-2a

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