Age Weighted Allocation Factors

[Guest MarkN]

I have recently learned, when running an age weighted plan in Relius, that the allocation shedule in the Corbel document is not the same as the schedule that Relius Admin. uses to calculate points. I would think that you should have the same factors when you use the same interest assumptions and mortality table. Has anyone else ran into this issue?

[Tom Poje]

Never had a problem in that area.

I have seen scenarios in which it was suspected the points were different, but in reality they were the same (e.g. they differed by a common factor, for intance '12', [all points could be divided by or multiplied by 12 and you would achieve the same results]

some people are 'correct' others are 'not'. this usually reflects the choice selected -

age 'nearest' or age 'last'. this results in an individual either being a year younger or older than what you had figured, therefore the expected poits are off by one years worth of interest.

[Guest DottleC2]

Tom's comments are right on.

We've had problems in the past because the Default for our Relius system when a plan is set-up seems to be age last, rather than age nearest. The administrator can overlook the spec. We decided to make it a policy to set ALL plans to age nearest, to avoid problems when running contribution calculations and etc. (Even going to the extreme of setting this spec for 401k plans and etc. that don't use it, and checking the ages generated on census.)

One of these days, I'd like to look into the defaults and how they're set. The general test reports selected as a default can be selected via the plan specs screen, which has helped greatly in getting a set of reports that can be used internally for checking and oversight. It would be nice to see more of this.

Regards,

Bill

[Guest MarkN]

I understand and agree with what each of you said and believe that this would fix many of the problems associated with the discrepancies in annuity factors; however, let's assume that we have a participant that is > age 65. According to the table in the document, the annuity factor is 1.000 at age 65 and each year afterwards. According to the table Relius Admin. uses, the factor is 98.975424 at age 66 and decreases in each year afterwards. This could significantly alter the contribution allocation if an employee is still due a contribution in their early 70's, correct?

Mark

[Tom Poje]

I would agree - you may have to watch out on ees who are over age 65, depending on the document. That is a good point.

That is because the APR is smaller at age 66 than at age 65, thus if you had 2 ees with identical comps, one age 65 one age 66, the ee at age 65 ends up with more points than the ee at 66, thus receives a larger contribution, unless the document is written specifically to prevent this.

This was less of a problem when the 415 limit was 25% of pay, as older ees quite often hit the 415 limit.

[Guest DottleC2]

How do you go about overriding the....points. Or is it possible to change the allocation if a participant is over 65 and the allocation and APR is computed contra to the document? Or are we looking at having to manually calculate the contribution?

Bill

[Tom Poje]

after running eligibility you could go into census and enter the coorect # of point under computed comp. then run the contribution.

or lie to the system and change date of birth so ee appears to be age 65. then fix date of birth before printing reports

I vaguely recall someting in the regs stating this scenario will not cause a plan to fail nondiscrimination testing