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Salary

This topic contains the parameters that tell ProAdmin how to customize salary. The standard operator (#Salary) is based upon the <Base Salary Set> definition in the Census Specifications with salaries limited to the U.S. Internal Revenue Code section 401(a)(17) compensation limit.

Salary & Limits

Included Salary Definition Set(s) allows you to select one or more Salary Definition Sets from those entries already defined in the Salary Definition Set Library. The Multiplier indicates the weight that the salary has. This can be useful if you have one salary definition that includes base and overtime and another that jus includes overtime. If you select both and set the overtime to have a multiplier of -1, that salary would be subtracted from the other one to derive the base salary.

The Edit Salary Sets button allows you to access the Salary Definition Set library to create new definitions or modify existing ones.

Salary limit indicates whether salaries for this operator will be limited to

If Prorate salary limit for mid-year decrement is checked, the annual salary limits are prorated based on months started for decrements prior to the plan year end.

If Reflect salaries after decrement is checked, salaries are not frozen at decrement. This only works if the Salary Definitions in the referenced Salary Definition Set(s) recognize salary after decrement.

Cash Balance Crediting

This dialog box allows for special treatment of this custom operator when it’s used in a cash balance benefit formula component with a crediting frequency other than annual. Thus, For cash balance crediting more frequently than annually, you may specify what the Salary Limit is and how the Accrual Basis Formula is evaluated.

The salary limit may be specified as either a Linear proration of annual amount over crediting period or Annual amount reduced by amount used so far. For semi-annual, quarterly, monthly or daily crediting frequencies, if the linear proration option is selected, when applying the salary limit to determine intra-plan year accrual basis values for interest crediting, crediting period salaries are limited by the annual limit prorated over the crediting period based on months started, or half-months started in the case of semi-monthly crediting frequency. When the crediting frequency is bi-weekly or weekly, the number of crediting periods in a year is variable (26 or 27 for bi-weekly crediting and 52 or 53 for weekly crediting) and crediting periods will cross years; these facts create issues for determining the appropriate compensation limit for accruals in the period. For weekly and bi-weekly crediting, ProAdmin uses the first end of crediting period date within a year to determine the applicable limit to be prorated. If the Or through month of decrement date if less box is checked, for decrement prior to the last month of the crediting period, the annual salary limit is prorated based on the number of months started in the crediting period.

If Annual amount reduced by amount used so far is selected, the annual salary limit will be reduced by the amount allocated so far in the plan year. For example, assume the salary limit for the current year is 160,000 and the plan is crediting on a quarterly basis. If the pay in the first quarter is 30,000, the pay for the second quarter would be limited to no more than 130,000. Also, if the entire pay limit is used up in the first three quarters of the year, then there would be no accrual assumed for the final quarter.

There are three options for the Salary before any cash balance component parsing is parameter.

If Cumulative plan year value is selected, when plan year values are parsed to determine intra-plan year accruals, the accrual basis formula (the ”basis”) is evaluated based on the cumulative plan year value through each crediting date. The net result of the accrual basis formula is then parsed to determine the accrual during each crediting period. If the cash balance component is parameterized to parse the basis amounts (the default), it will then automatically determine crediting period accruals based on the incremental basis in each crediting period. For example, assuming the crediting frequency is monthly, if $10,000 is earned a monthly using this option would increase the basis by increments of $10,000 at the end of each month. Resulting in a stream of salaries of $10,000, $20,000, $30,000...$120,000 for the year. This is the default behavior of the #SALARY operator and would generally result in accrual basis for each crediting period being the salary “earned” during that crediting period.

If Total plan year amount is selected, the total end of plan year amount is reflected at each intervening date during the plan year. In this case, the cash balance component should be parameterized to use the basis directly (i.e., don't parse) because otherwise parsing will cause the entire plan year salary to be reflected in the first crediting period (only). Using the same numeric example as above, the total plan year basis of $120,000 would be referenced at each end of month crediting date. This is useful, for example, for applying a minimum hours worked during the plan year requirement to cash balance accruals.

If Incremental plan year amount is selected, when plan year values are parsed to determine intra-plan year accruals, the the basis will be evaluated using an amount earned in each crediting period directly rather than returning the cumulative amount earned through the crediting period. In this case, the cash balance component should be parameterized to use the accrual basis formula directly (i.e., don't parse) because otherwise parsing will cause only the change in the incremental salary to be reflected in each crediting period. Once again, using the $10,000 per month basis example as above, a basis of $10,000 would be referenced at each end of month crediting date. This is useful, for example, for eliminating accruals if insufficient hours are earned during the crediting period.

Conditions

Starting Point initiates the calculation of salary at a date potentially later than the first salary. The salary will be zero as of any date before this starting date. The starting point may be specified as any combination of Age/Service/Points/Date, where the criteria are evaluated similarly to any other eligibility criteria. Thus, for any given row of the age/service/points/date criteria, the salary will start when all of the criteria are met, and if there is more than one row, the alternative rows will be evaluated as “or” conditions. Thus, if one row says age 30 and 5 years of service and another row says 1/1/1995, then the salary will start at the earlier of 1/1/1995 and the date when the member is at least age 30 with at least 5 years of service.

Freezing Point freezes the salary (in the future or in the past) as of the decrement date when the freeze conditions are first met. If the salary is frozen before a member’s date of hire, then that member’s salary will be zero at all decrement dates. When the freezing point is based on age, service and/or points (i.e., age plus service), these criteria are applied in the same manner as for benefit eligibility definitions (and the same rules for computing age and service apply). When the freezing point is based on date (perhaps in addition to the other criteria), enter the date at which you wish to freeze the salary. ProAdmin calculates the salary as of that date; salaries at any later date will be the same amount. For example, suppose the decrement date is 7/1/2001 and you enter 7/1/1997 as the freeze date. Then salaries as of all future years will be the same as the 7/1/1997 salary.

If starting or freezing point requirements refer to more than one service field, or if more complex rounding rules apply, you may then refer to a scalar date field from the Data Dictionary in the or earlier date parameters fields in the Starting and Freezing point sections, respectively. If values for these referenced dates change over time, consider storing that information in a numeric array field.  Then use a Data Default to select the appropriate value for the calculation to be stored in the referenced scalar data dictionary field. Salary will start or freeze at the earliest satisfaction of the date field or of a row from the grid. 

A salary custom operator may have both a starting point and a (later) freezing point. If the salary is not being frozen, then the starting and freezing point spreadsheets may be left blank.

When the starting and freezing points are determined by service or points, you must specify the Service Definition Set for starting and freezing salaries. The button accesses the library to create and modify Service Definitions.

The Date adjustment for starting and freezing parameter allows you to select a Date Adjustment from the library. The button accesses the library to create and modify Date Adjustments.