FAQ 91: Calculations--Retiree to share in a contribution allocation


I have a plan that allocates to everyone except terminated participants with less than 500 hours. The plan document also stipulates that anyone who terminates because of retirement, death, or disability gets an allocation (the hour or service requirement is waived). How do I code this person to receive an allocation? His hours are 66, and ASC determined his status as "N" (terminated with less than 500 hours). I don't see a Retired code. Does ASC recognize that a person is Normal Retirement Age at termination?


To get a retired, deceased, or disabled person to share in the allocation, you just need to make sure that the status code that they are assigned (actually, the corresponding group code) is coded as eligible for the allocation in the source specs. You can use a status "R" for retired employees, and a status "D" for deceased employees. Using either of these will show them as retired or deceased on the census printouts, and will pick them up properly for the 5500 Information report. We don't really have a code set aside for disabled employees, but you could use something like status "I" (inactive), if it is not being used, or you could use your own code.

Any time that you are using a "non-standard" status code, make sure that it is added to some group on the Group Definition (GROUPDEF) screen, whichever group that may be. Groups A and B are set aside for any kind of miscellaneous codes, but you can also add status codes to the other groups like the actives group (i.e. group 4). In fact, most users will include statuses "R" and "D" in group 4 so that they are treated like actives in their year of retirement or death. The valuation calculations will also, by default, ignore the hours requirement for status "R" and "D" employees as long as you leave the "Ignore hours for Status R, D" box checked when running calculations.

The system will never make a person a status "R", as they should only be coded as retired when they actually retire, not when they are eligible to retire. As far as vesting goes, once a person passes their normal retirement date, the system will make them 100% vested, but you will have to force the vesting on deceased employees - make their prior and current vesting 100% and the system will not override it.