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

Problem: I have a plan with a frozen accrued benefit as of 12/31/2024. Effective as of 1/1/2025 and going forward, the formula will be 2% of FAC (Hi -3) for each year of participation after 1/1/2025. How do I code this change in the plan formula?

Solution: ------------------------------------------------ Plan Specification Changes ------------------------------------------------ 1. General \ Compensation \ COMPAVG: Set "Add-Ons" field to "1 - Increase Benefits." 2. General \ Identification \ ID: Enter the fresh start date of 12/31/2024 in the field "Exclude Accrual Service." 3. General \ Benefits: In the appropriate Benefit Formula screen, enter the new formula, 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 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. ------------------------------------------------ Employee Record Changes ------------------------------------------------ 1. EE: Basic Data \ DATE - Set the Participant Status code for all active participants to "C". When you run Calculations > Valuation, the "C" participants will have their accrual start dates recalculated (along with all other dates except for their entry dates). NOTE: for any active participant beyond their normal retirement date as of the valuation date, their original NRD will be recalculated. You will need 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 participants. 2. EE: Benefits \ PROJBENF - Enter the pre-fresh start accrued benefits in all three "add-on" fields. 3. EE: Basic Data \ DATE (Optional) - If you need to print an age/service illustration for this plan (as an attachment to the Schedule SB), then for each participant, enter the appropriate number of years of service earned up to the Exclude Accrual Service date in the Pre-Fresh Start field. ------------------------------------------------ Run Calculations ------------------------------------------------ After making the above changes, run Calculations > Valuation. The results should reflect a prior frozen accrued benefit plus accruals under the new formula after the Exclude Accrual Service Date.