; FAQ 480: Compensation average calculation

FAQ 480: Compensation average calculation

Problem:

The compensation average is not working correctly for Mrs. Jones, and she is not getting an accrual. This is a BOY valuation with plan year ending 12/31/2022.


Solution:

The system is not considering the prior year's compensation in the average compensation calculation because the date in the prior year's history record is coded incorrectly. The compensation period for beginning of year valuations is the prior year's compensation - ending on the last day of last year. History dates are expected to be the last day of the prior year. For end of year valuations, the compensation period is typically the year ending on the valuation date. History record dates cannot be edited. Therefore, the only way to change the history record date is to delete the incorrectly coded history record and re-enter the record with a 12/31 date rather than 1/1.

For beginning of year valuations with a plan year ending 12/31/2022, the most recent history record should be dated 12/31/2020. 2021 Compensation should be input into the Employee \ COMP \ Current Compensation field. The compensation the employee is expected to earn during the current plan year is entered into the Current Annual Compensation Rate field and is considered in the calculation of average compensation used to calculate the expected accrual.

For end of year valuations with a plan year ending 12/31/2022, the most recent history record should be dated 12/31/2021. 2022 Compensation should be input into the Employee \ COMP \ Current Compensation and Current Annual Compensation Rate field.