Comparability Plan Formula

[Guest laurasbay]

Does anyone have the actual formula for determining each employees EBAR? I need to calculate this by hand for an employer to verfye the software...

[rcline46]

Most software will print a detailed EBAR calculation page, and you can then check each number in the calculation from that page.

[Jim Chad]

If I understand you correctly, an employer is questioning your numbers. Is that correct?

If that is correct, email me at Jchad@lettinga.com and I will send you what I Put together to teach myself this.

[Tom Poje]

the example I use in my talks is as follows:

Assume 44,000 contribution is invested at 8.5% interest.

if employee is age 60 and NRA is 65 then

Age 61 = 44,000 * 1.085 = 47,740

Age 62 = 47,740 * 1.085 = 51,798

Age 63 = 51,798 * 1.085 = 56,201

Age 64 = 56,201 * 1.085 = 60,978

Age 65 = 60,978 * 1.085 = 66,161

[or simply contribution * 1.085 ^ (yrs to retirement) [assuming 8.5% interest rate]

the APR for 1983 IAF at 8.5% interest is 115.39

66,161 / 115.39 = $573.37 a month [monthly benefit]

Or, an annual amount of 12 * 573.37 = 6880.44

if compensation was 220,000 then

6880.44 / 220,000 = 3.127%

the 3.127% is the E-Bar.

if you impute disparity then you would add on an additional piece (most of the time .65 for those with comp less than covered comp, less than .65 if comp > covered comp)

all contributions except after tax, and catch-up contributions are included. you can not impute disparity on deferrals. match, shnecs, qnecs.