FAQ 141: ADP--Earnings on returns calculation


While reviewing an ADP test and analyzing the adjustments, I would like to know how does ASC calculate the interest on any contributions that are to be returned. When does the system recognize the contributions/withdrawls to come in? Also, if the information imported to the system from, say John Hancock, is wrong, how do I erase all that data and import the correct amounts?


The explanation of how the system calculates the ADP interest is as follows:

ADP/ACP returned interest calculation

The calculation is done by source, then broken down by fund.

Total Excess Contribution Interest = Excess Contribution Plan Year Interest + Gap Period Interest

Excess Contr Plan Year Interest =
[(Excess Contribution*Plan Year Interest) / (Ending Balance-Plan Year Interest)]
The denominator in the above can have withdrawals added back, if the user de-selects the ADP setup question "Include Withdrawal in Interest Calculation".

To re-import the fund activity from John Hancock, go to Utilities-Change Structure-Clear Fund Values and select "Clear all values". Note that this will clear the beginning balances, in addition to all the current year's values. If you want to clear only certain fields, select "Clear only these values" and check the appropriate boxes, making sure to leave the "Clear all sources" and "Clear all funds" options selected.