Why are my deductions higher under a 412(i) Plan?
The funding level under 412(i) is based upon the guaranteed rate of return on which the premiums are based. The funding assumptions are lower in a 412(i), and therefore the deduction for funding is substantially increased. Competitive annuity and life products will typically outperform their underlying guarantee rates. This results in front-loaded funding of plan benefits. Excess performance over guaranteed rates results in a pattern of declining contributions over time.
