Guest bcggal Posted January 13, 2010 Posted January 13, 2010 DB plan with a career average formula integrated with covered compensation froze benefit accruals on 8/31/09. It is a calendar year plan. The benefit accrual for 2009 is based on compensation from 1/1/09 - 8/31/09. Should the covered compensation used in determining the benefit accrual for 2009 be prorated for the 8 months?
david rigby Posted January 13, 2010 Posted January 13, 2010 Should the covered compensation used in determining the benefit accrual for 2009 be prorated for the 8 months?If so stated by the plan / amendment, yes. Otherwise, it seems inappropriate to impute a proration. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
SoCalActuary Posted January 14, 2010 Posted January 14, 2010 If you do not pro-rate the integration level, this only hurts the higher-paid group, but not necessarily the HCEs. It should cause no trouble for testing purposes. If your document defined a pattern of accrual with monthly accruals, then you could argue for a prorating of the integration level.
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