Accrued-to-date testing

[BG5150]

Does anyone do their general testing using the accrued-to-date method? We have a client whose prior TPA did their calculations that way and I can't make heads or tails of it.

I understand the general premise, but Relius cannot do the calculation so it would have to all be done by hand. (Or, rather, spreadsheet)

Questions: for average compensation: are you taking the average compensation over the measuring period? Last 3? High 3?

Does the measuring period have a minimum length? 2, 3 years maybe?

Is this a popular method to use? This is the first time I've come acrosst this since reading about it for an ASPPA test like 10 years ago.

[FAPInJax]

I presume you are talking about a DC plan?

[Tom Poje]

well, the following might help

the first 2 pages from an ASPPA talk by Richard Bednarski (1998) gives a basic explanation and the last 2 pages a worksheet (and a sample) by Larry Deutch which is at least as old and the brain gears in my head squeaking along just enough to remember I even had these notes because the info poured out of the head too many years ago when I rolled over in my sleep. sorry, should have worn ear plugs.

poje useless and secret files.pdf

[K2retire]

well, the following might help

the first 2 pages from an ASPPA talk by Richard Bednarski (1998) gives a basic explanation and the last 2 pages a worksheet (and a sample) by Larry Deutch which is at least as old and the brain gears in my head squeaking along just enough to remember I even had these notes because the info poured out of the head too many years ago when I rolled over in my sleep. sorry, should have worn ear plugs.

As someone who regularly sleeps with ear plugs, I can attest that they do not help with brain leakage!

[Dougsbpc]

Often, accrued-to-date works very well with a plan that has operated as comp-to-comp contribution allocation for years and then switches to a cross-tested plan.

We had an accounting firm client that had 3 partners who were getting older and wanted to sock away as much as possible before retirement. They kept the same 8% annual contribution to everyone but the partners were able to have the maximum for a number of years. This was partially due to the fact that they had a comp-to-comp plan for many years along with using accrued to date.

[AndyH]

Tom, you're either a packrat or you invented the scanner in 1988. I think I used a 4K computer in 1988.

[Tom Poje]

Andy - it was 1998 when I obtained the notes not 1988, and only saved because it pertained to cross testing, though I have never used it. but enough useful info in those notes (at least I think) to get one started

[AndyH]

oh, I could read better in 1998 or 1988. It is a good outline though.