QUESTION: The Entry Age Normal sample life report shows 0 for PVFS in the first row, although I specified no service or age requirement for inclusion in the plan. Why?

ANSWER: The first row represents the assumed year of hire, not the year of entry into the plan; thus the first row might not represent the first year valued (beginning of the funding span) under an entry age normal liability method. Even though there is no age or service requirement for inclusion, if the hire date ProVal assumes precedes the actual hire date, the date of plan entry is one year later than the assumed hire date. Thus the first normal cost is generated one year after the first year of service; to be consistent with PVFNC, PVFS is 0 in the first row.

To see how this can happen, consider a 1/1/2013 valuation and a plan participant born on 1/1/1980 and hired on 5/22/2008. The first row presents values as of the valuation date in 2008 (the year shown in the Year column of the sample life report), i.e., values as of 1/1/2008. Because 1/1/2008 precedes (rather than follows) the participant's actual hire date of 5/22/2008, arguably funding the participant’s benefit cannot start at 1/1/2008 (before the first day of employment), so the first year for which a normal cost should be generated begins at 1/1/2009.

ProVal performs the following calculations to determine the first year of service with the employer and the corresponding assumed hire date:

	a. Birth Date:	1/01/1980
	b. Hire Date:	5/22/2008
	c. Current Valuation Date:	1/01/2013
	d. Age Nearest Birthday on 1/1/2013:	33
	e. Age Nearest Birthday at Hire Date:	28
	f. Assumed Hire Date = c. - (d. - e. yrs)	1/01/2008 = 1/01/2013 - (33 - 28 yrs)

Because the assumed hire date precedes the actual hire date, service is negative as of 1/1/2008 and a service requirement of 0 for funding eligibility is not met, forcing PVFS to be 0 in the 2008 (first) row. If you wish to start the funding span at 1/1/2008, instead of 1/1/2009, use a service requirement of -1: ProVal will determine an assumed hire date of 1/1/2008 but will determine the beginning of the funding span also to be 1/1/2008 (because at 1/1/2008, service is negative but greater than -1, so the service requirement for funding eligibility is met).