Setting Up Cash Balance Parameters

Base on Consolidated Earnings

Indicate the consolidated earnings function result you use as the source of your earnings data.

The cash balance accounts function determines credits as a percentage of earnings. The consolidated earnings function provides the earnings history.

Accumulation Period

Select the cash balance accumulation period: Plan Year, Calendar Year, or Calendar Month.

Cash balance accounts grow over defined accumulation periods. For example, a plan may grant credits every calendar year or every plan year. Interest is credited at the end of the accumulation period.

When you look at the results of your cash balance calculations, you see the total for each period, as well as the balance at the end of each period.

Apply 401(a)(17)

Select this option to use the limits. If you use the limits, use the adjoining text field to indicate the 401(a)(17) method to use. Qualified plans must observe Section 401(a)(17) limits.

Projection Method

Enter a projection method.

Because consolidated earnings data is not always available for all periods (it is not available for estimates with event dates in the future), every cash balance accounts definition requires a projection method. The projection establishes an annualized earnings amount for the current period and then applies the assumed salary escalation rate (entered on the calculation page) to estimate future periods. The final period earnings are prorated using rules from the projection method.

Balance Interest to Event

Enter a method to use for balances up to the event date.

Balance Interest After Event

Enter a method to use for balances after the event date.

Credit Interest

Enter a method to use for credits made for the current period.

Level Rate

Uses the same percentage for all earnings.

Set the rate used on the Cash Balance 3 of  3 page.

Step Rate

Uses one rate below a threshold amount and another rate above the threshold.

Enter additional information in the Step Rate Threshold group box. Also, set the rate used on the Cash Balance 3 of  3 page.

User Code

Uses customized code.

No Credit

Use if there are no continuing credits to your cash balances—that is, the only increases are due to interest.

You typically use this option for periods after the event date or for periods of ineligibility, such as those preceding a rehire or a return from leave. You use the system's grouping capabilities to apply the no credit definition to the appropriate period of time.

Threshold Type

Select from these options:

• Percentage of Table Lookup: You can vary the threshold by selecting this option, entering a fixed percent in the Lookup Percent field, and indicating a table lookup alias in the Lookup Table Name field.

  The cash balance function looks up the rate, based on the criteria you define, to find a single threshold amount that applies to all periods.

• Percentage of MTWB (percentage of maximum taxable wage base): Select this if your lookup is based on the maximum taxable wage base. Because the maximum taxable wage base changes every year, the system looks up the value for each accumulation period. If you select this option, you must also select a value in the MTWB Lookup Options group box.

• Constant Amount: If you select this, enter an amount in the Constant Amount field.

• User Code: Use your own custom user code to set the step rate threshold.

MTWB Lookup Options (maximum taxable wage base lookup options)

Select one of the following to indicate the date on which to base the lookup: First Day of the Period, Last Day of the Period, First Day of the Plan Year, or First Day of the Calendar Year.

When you use either the plan year or calendar year option, the system uses the plan year or calendar year that contains the first day of the accumulation period.

Subject to Minimum and Subject to Maximum

Select these check boxes to set minimum and maximum credits per accumulation period. Your cash balance plan may give a fixed number of credits (for example, 500 per year), rather than basing the credits on earnings. In this case, you can use the minimum and maximum earnings limits to force the correct number of credits.

If you do apply a limit, select Table Lookup or User Code to determine how to find the limit.

Lookup Table Name

If you use a lookup table to apply a minimum or maximum, select the lookup table to use.

Method

Select a method, then enter supporting information in the Up to Threshold and Above Threshold fields.

• Flat Percentage: Enter a fixed percentage.

• User Table: Enter the table lookup alias. With this option, you can look up the credit percentage using a regular table lookup. In this case, the percentage is based on criteria you set up using the table lookup utility, and you use a single rate for all periods.

• Program Generated Lookup: Select this option to vary the percentage according to age, service amount, or both age and service amount. "Program generated" means that the system looks up the rate for each period because the lookup basis (for example, the employee's service) changes each period. This is different from a regular table lookup, where the lookup is the same for all periods.

• Custom Statement: Enter the custom statement or statements that provide the percentage.

Up To Threshold and Above Threshold

If you use a level rate, complete the Up to Threshold field.

If you use a step rate, complete both the Up to Threshold and Above Threshold fields.

Enter information that supports your selected method. For example, if the method is Flat Percentage, enter a percentage.

Option

Select one of the following to indicate what the program-generated lookup is based on:

• Age: Age only.

• Service: Service only.

• Age Plus Service: Age and service added together to yield a single lookup value.

• Age And Service: A two-way lookup.

Age Start

If your lookup includes an age component, enter an alias for the date of birth (or any other starting date).

Age Method

Enter a duration option specifying the age calculation method.

Service Name

If your lookup includes a service component, enter a service function result.

Age End Date

For the age components, select either First Day of the Period or the Last Day of the Period.

Service As of

For the service component, select either First Day of the Period or the Last Day of the Period.