CPC Actuarial Concepts & Funding Methods Flashcards
6 cards from real CPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPC Actuarial Concepts & Funding Methods flashcards as text
Which actuarial cost method spreads the present value of future benefits as a level percentage of projected future compensation?
Answer: Entry Age Normal
The Entry Age Normal method allocates pension costs as a level percentage of pay from the employee's entry age to expected retirement.
What is the minimum required contribution for a single-employer defined benefit plan under IRC Section 430?
Answer: The greater of the target normal cost or the shortfall amortization charge
IRC Section 430 requires contributions equal to the greater of the target normal cost (net of expected plan expenses) or the shortfall amortization charge.
A plan's 'funding target' under PPA 2006 is measured using what interest rate?
Answer: 24-month average segment rates based on corporate bond yields
PPA 2006 requires use of three 24-month average segment rates derived from investment-grade corporate bond yields to discount funding liabilities.
Which of the following best describes the 'at-risk' liability used in defined benefit funding calculations?
Answer: Liability assuming maximum lump-sum elections and early retirement
At-risk liability assumes participants will elect the most expensive optional form of payment and retire at the earliest retirement age if that increases liability.
A plan sponsor must obtain a waiver of minimum funding requirements from the IRS when?
Answer: Making the minimum required contribution would impose a substantial business hardship
IRC Section 412(c) allows a funding waiver when a plan sponsor demonstrates that meeting the minimum contribution requirement would cause substantial business hardship.
What is the purpose of the 'credit balance' in a defined benefit plan's funding standard account?
Answer: To track excess contributions that can offset future minimum required contributions
A funding standard account credit balance represents contributions made in excess of the minimum required amount and can be applied to reduce future minimum contributions.