Allocate and reflect salary
The allocate and reflect salary dialog contains parameters relevant to projecting salaries during an estimate, generating measurement period salaries from less frequent salaries, working with rates of pay, and dealing with non-calendar plan years.
Allocate reported and projected salaries using: indicates how reported salaries will be allocated based on how much time each salary covers (i.e., the amount of service earned from the start date to the stop date versus the amount of service earned in the covered full measurement periods). You can choose Nearest half-months (nearest period for bi-weeks and weeks) or Service weighted measurement periods. If the latter is chosen, select an existing entry from the Service Definition Set Library to define the weights. The button allows you to create and modify Service Definition Sets.
The Allocate the full monthly salary to each full or partial month checkbox is available (unghosted) when using non-annual measurement periods and the Generate measurement period salaries from less frequent salaries option is selected on the Salary Definition main dialog box. If the box is checked, a full measurement period salary (determined for each reported salary), will be allocated to each full or partial measurement period (covered by the reported salaries’ start and stop date) as if each period contributed a full measurement period salary. This would be appropriate, for example, to gross up reported pays to an annualized value If the box is not checked, the calculated measurement period salary is allocated to each covered period based on the fraction of the allocation service that period covers.
For example, a $7500 salary was reported for 3/15 to 6/15, and the measurement period is monthly, If the box is not checked, the default allocation is based on nearest half-months, so $7500 would be re-allocated as $1250 for 3/15 to 3/31, $2500 for 4/1 to 4/30, $2500 for 5/1 to 5/31, and $1250 for 6/1 to 6/15. If the box is checked, then $2500 would be allocated for each full or partial period: $2500 for 3/15 to 3/31, $2500 for 4/1 to 4/30, $2500 for 5/1 to 5/31, and $2500 for 6/1 to 6/15 (for a total of $10000). This could be appropriate if you needed to gross-up the reported pays into annualized values.
If checked, the Projected salaries before decrement occur only at measurement period end box indicates that projected salaries are assumed to be paid at the end of each measurement period rather than accruing ratably over all considered dates. Checking this box generally provides salaries that visually seem more correct, and also helps ensure that cash balance plan projected accruals occur only at crediting dates. This parameter does not apply to rates of pay.
For example, if a participant earns $5000 per month and is half way through a month, they would earn $2500 in the first half of the month and $2500 in the second half, for a total of $5000 for the month. If you are using this Salary Definition Set for Cash Balance accruals (and have not parameterized the related Service Definition Set to "change service only at decrement and end of month"), you could check this box to help prevent random accruals: if service changes during the month, the ½ month salary would cause two ½ month accruals in the cash balance, presumably generating the wrong net and total (for the month) interest accruals.
For additional information on using the above allocation parameters, please see the Salary Definition FAQ "Defining how reported and projected salaries should be allocated."
If the Salary Definition is referencing a Salary History based on rates of pay, if checked, the Use the largest rate of pay to date in each measurement period box will potentially overwrite the salary history if there is a drop in pay rate during a measurement period. For example, if rates of pay are reported every six months or when a job change occurs, the Salary Definition measurement period is monthly, and in the month of June, two rates of pay are reported, where the first rate is $1,200 and the second is $1,000, if this box is checked, ProAdmin will use the $1,200 rate for June and the $1,000 rate for all subsequent months.
If the Salary Definition measurement period is not annual, the For non-calendar plan years, the annual salary is the sum of the allocated: parameter is available (unghosted), allowing you to define how pay should be handled for ProAdmin’s salary-based operators when the plan year is not the calendar year. If Plan year salaries is selected, then the sum of the salaries allocated to the plan year is returned for salary-based operator purposes. For example, if the plan year is 7/1, the sum of salaries allocated to the period from 7/1/2014 to 6/30/2015 is used for the 6/30/2015 salary calculation. If Calendar year salaries is selected, the annual salary is the sum of salaries allocated to the calendar year.