Froogle | ASOP 4 | Section 3.21

When performing a funding valuation, except where the actuarially determined contribution is based on a prescribed assumption or method set by law, the actuary should also calculate and disclose a reasonable actuarially determined contribution. For this purpose, an actuarially determined contribution is reasonable if it uses a contribution allocation procedure that satisfies the following conditions:

a. all significant assumptions selected by the actuary are reasonable, all significant prescribed assumptions or methods set by another party do not significantly conflict with what in the actuary’s professional judgment is reasonable in accordance with ASOP Nos. 27 and 35, and the combined effect of these assumptions is expected to have no significant bias (i.e., it is not significantly optimistic or pessimistic) except when provisions for adverse deviation are included;

b. the actuarial cost method used should be consistent with section 3.13. If an actuarial cost method with individual attribution is used, each participant’s normal cost should be based on the plan provisions applicable to that participant;

c. if an amortization method is used, it should be consistent with section 3.14;

d. if an asset valuation method is used, it should be consistent with section 3.15;

e. if an output smoothing method is used, it should be consistent with section 3.16; and

f. the contribution allocation procedure should, in the actuary’s professional judgment, be consistent with the plan accumulating assets adequate to make benefit payments when due, assuming that all assumptions will be realized and that the plan sponsor or other contributing entity will make actuarially determined contributions when due.

Comment	Response
One commentator suggested alternative wording for 3.21(b).	The reviewers agree and modified the language in response to this comment.
One commentator suggested section 3.21(b) should be clarified to allow an entry age normal cost calculation to use “the current plan of benefits for each participant,” for the purposes of determining a reasonable actuarially determined contribution.	The reviewers believe the guidance is appropriate and made no change in response to this comment.

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