; FAQ 1022: Coding an integrated formula with unit accrual

FAQ 1022: Coding an integrated formula with unit accrual


I have a plan with an integrated formula that limits the excess portion to 35 years, but the base portion is limited to 50 years. Accrual is unit accrual. How do I code this in ASC?


A formula such as 50% of average compensation reduced for years of service less than 50, plus .65% of average compensation in excess of covered compensation up to a maximum of 35 years would be coded as follows:
- FLATBENF screen: enter 50 in the Pct of Comp field and enter 50 in the Reduce for Years Less Than field.
- UNITBENF screen: enter .65 in the Pct of Excess field, enter the covered compensation table in the Excess over field, and enter 35 in the Maximum Years field.
- ACCRUAL screen: enter Unit per Formula for Type of Accrual and 50 in the Years for Full Accrual field.
Make sure the service definitions on the Flat Benefit, Unit Benefit, and Accrual screens match.

A participant with average compensation of $9,000, covered compensation of $7,910, 40 projected years of service at normal retirement and 36 years of service on the valuation date would accrue a benefit of $3,487.98 as follows:
FLATBENF portion: 9,000 x (.50/50) x 36 = 3,240
UNITBENF portion: (9,000-7,910) x.0065 x 35 = 247.98
$3,240+247.98 = $3,487.98