; FAQ 847: Fresh Start - Coding a new formula with a prior frozen benefit

FAQ 847: Fresh Start - Coding a new formula with a prior frozen benefit


I have a plan which I have frozen the accrued benefit as of 12/31/21. As for 1/1/22 going forward, the formula will be 2% of FAC (Hi -3) for each year of participation after 1/1/22. How do I code it? Thanks.


Enter the pre-fresh start accrued benefits in all three "add-on" fields in the participants' Projected Benefits screens.

In the Compensation Averaging screen, make sure "Add-Ons" are set to "1 - Increase Benefits."

In Plan Specifications / General / Identification / ID screen, enter the fresh start date in the field "Exclude Accrual Service." Enter the new formula in the benefit formula screen, and for the spec "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 that 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.

Make all active participants status code "C". When you run the valuation, the "C" participants will have their accrual start dates recalculated (along with all other dates except for their entry dates). Realize that, for any active participant beyond his/her normal retirement date, their original NRD will be recalculated, so you may have to change them back to status code "A" and re-enter the normal retirement date as the day after the valuation date. In general, you should not change the "Date NRA Attained" for these people.

Rerun the valuation, and you should get good results. If you need to do an age/service illustration for this plan (as an attachment to the Schedule SB), then for each participant, in the Dates screen, enter the appropriate number of years of service in the Pre-Fresh Start field.