How is the annual accrual for a Cash Balance Plan General Test calculated after the first plan year if the interest crediting rate changes (annual change in 417(e) rate).

Assumptions:
Testing on the annual basis (not accrued to date).
Cash Balance Plan credits interest at 417(e) rate.
5% 417(e) for year 1 and 6% 417(e) for year 2.
$1,000 allocation each year.
Participant is age 40 for year 1 and 41 for year 2.
Retirement age is 65.
5% GAR 94 Age 65 APR Monthly = 141.5291
6% GAR 94 Age 65 APR Monthly = 130.3888

Year 1 Accrual:
1,000 * 1.05 ^ (65 – 40) / 141.5291 = 23.93

Year 2 Cash Balance Account Detail:
1,000 * 1.06 + 1,000 = 2,060

Is the Year 2 accrual for general testing (a) or (b) below:

(a)
2,060 * 1.06 ^ (65 - 41) / 130.3888 = 63.97
63.97 – 23.93 = 40.04 accrual for testing

or

(b)
2,060 * 1.06 ^ (65 - 41) / 130.3888 = 63.97
Then Recalculate Year 1 at new interest rate
1,000 * 1.06 ^ (65 – 40) / 130.3888 = 32.92
63.97 – 32.92 = 31.05 accrual for testing