FAQ 426: Allocations--Coding and running age-weighted allocations


Is there a way to run an age-weighted allocation for a specific dollar amount for the entire allocation? Our client wants to contribute $200,000 to all eligible participants. Also, what type of reports can we print to get details on the age-weighted allocation?


You don't have to use the budget routine to calculate an age-weighted plan if there is a known dollar amount to allocate. Here are the steps:

1. Go to PLANSPEC-View-Source specs-Employer.

2. Input the $200,000 in the Discretionary Amount field under the "Show Total Contrb." button.

3. Select option "6-Cost of 1% of Pay per Year (Age-Based)" as the Contribution Allocation Method.

4. Run complete valuation calcs (Calculations-Valuation).

5. To see the allocation basis, as well as the allocations to individual employees, print the "Contributions and Forfeitures" report that is part of the 401(k) valuation reports. You can also see the allocation basis on the CONTRIB screen, which you can use in a grid.

Additional notes about age-weighted allocations:
1) The system allocates the age-weighted piece first without regard to top-heavy or 415.
2) It then "tops up" for top-heavy minimums and cuts back for 415, and adjusts the allocation accordingly. This is why some participants may be getting more of an allocation than their age weighted factor allows.
3). This is a uniform allocation and meets the Safe Harbor rules for the 401(a)(4) test.