FAQ 496: Fresh Start - Coding a wear-away formula

Problem: I have a plan that is a Fresh Start with Wear-away where a formula change is effective 1/1/2024 and the grandfathered benefit accrued as of 12/31/2023 will be treated as a minimum accrued benefit compared to the new benefit formula. How do I code this design?

Solution: ---------------------------------------------------- Plan Specifications ---------------------------------------------------- General \ Identification \ ID screen - Enter the Fresh Start Date in the field "Exclude Accrual Service" General \ Compensation \ COMPAVG screen - For the Benefit Add-ons field, select "2 - Forced Minimum Benefits" General \ Benefits \ Formula Benefit screen - Enter the new formula in the benefit formula screen, and for the field "Red Prior to Acc Excl Dt" select "5 - Fresh Start". If using formula tables, apply this same coding in your formula tables. All other fields on the benefit screen should be coded appropriately. Make sure the Starting Date and Basis of Year are consistent with the same relative fields in the ACCRUAL screen. ---------------------------------------------------- Employee Records ---------------------------------------------------- Basic Data \ DATE screen - Set all active participants' status code to "C". When you run Calculations > Valuation, the "C" status participants will have their accrual start dates recalculated (along with all other dates except for their entry dates). During Calculations > Valuation, for any active participants with a Normal Retirement date (NRD) before the plan's valuation date, their original NRD will be calculated and stored. Change these participants back to status code "A", re-enter the NRD as the day after the valuation date, and run Calculations > Valuation again. In general, you should not change the Date NRA Attained for these participants. If you need to create an age/service report for this plan (as an attachment to the Schedule SB), then for each participant, in the DATE screen, enter the appropriate number of years of service earned prior to the Fresh Start Date in the Pre-Fresh Start field. Benefits \ PROJBENF screen \ Add-on to frame - If the Fresh Start Date is the current valuation date, enter the grandfathered accrued benefit in all three add-on to benefit fields. The amounts entered will remain unchanged when either Calculations > Valuation or Update to New Period are run. Benefits \ ACCRBENF screen - If the Fresh Start Date is one or more years in the past, enter the grandfathered benefit in the Prior Accrued Benefit field.