Include/Exclude Earnings During Measurement Period?

[Guest sammy]

I am using the accrued to date method in order for a defined contribution plan to satisfy the general test on a benefits basis. I am using 1/1/02 as my fresh start date. I have the account balance as of 1/1/02 and as of 12/31/03.

I believe I exclude the earnings (or losses) attributable to the 1/1/02 account balance that were credited during the measurement period (1/1/02-12/31/03) but include the contributions made for the 2002 and 2003 plan years (including the employer contribution for 2003 that will be made in 2004) and the earnings attributable to the contributions made during the measurement period. Is this correct?

It seems like it will be very difficult to figure out the earnings attributable to the 2002 and 2003 contributions, especially if the accounts are self-directed and/or 401(k) deferrals were being made. Am I missing something?

For a participant who becomes eligible on 7/1/03, I believe I cannot use his compensation only while a participant so his accrual rate will be his 2003 comp. divided by the 2003 allocation, normalized to an annuity at normal retirement age. I assume I do not include his 2002 compensation since he was not a participant for any portion of 2002. Correct?

[AndyH]

sammy, your first three paragraphs are correct. I'm not sure what your questions are in your last paragraph.