FAQ 902: DC:Earnings allocation - segregated accounts

Problem: Our prototype DC plan will always be set up with one fund, multiple sources. We allocate earnings to each individual participants to spread across each source, as they usually have segregated brokerage accounts. We currently cannot get the system to allocate earnings for a new plan as it is trying to spread based on $0 beginning balance. How can I get ASC to allocate earnings on the fund based on ending value?

Solution: https://asc-net.wistia.com/medias/czqfodxb7i There is a special routine in the system called “Interest from Balance” to accommodate this scenario. This is found from the main ASC menu-Calculations-Fund Calcs-Interest from Balance. Earnings will be allocated based on prior balances plus the earnings definition basis that you have selected in the fund specifications. If you wish to allocate earnings based on the weighted average in the account, then you must have the earnings definition set to "7=Time Weighted (Transactions)" and transactions must be processed prior to running this utility. If you wish to base the earnings allocation on the fund's prior balance plus a weight as a percentage of the total contributions, transfers, or withdrawals, then the earnings definition should be set to "1=Prior Account", the weights must be input in the source specifications, and contributions must be in the employee's record prior to running this utility. Choose whether you will be inputting the earnings amount or whether you will be inputting the fund's ending balance and want the system to back into the earnings figure before allocating across sources. The interest or ending balance amounts my be manually entered by individual in the ascwin screen after clicking OK, or they may be entered as transactions and read automatically by the program. If you have any questions regarding any part of this calculation, click inside the field and hit the F1 key and you will have online instructions for each field and how to complete the calculation. IMPORTANT: After you have run this utility for all applicable funds and employees, you will need to go back into the fund specifications and change the earnings definition for all applicable funds to "D=Input(Total Account)" before running calculations. If this step is not done, the earnings input in the fund specifications, which would normally be zero with this type of account, will be allocated and all calculated earnings numbers will be zeroed out.