Glossary of Terms
The age of the employee.
This is an option to use for age at nearest birthday and age last birthday.
This tax bracket is used to estimate the after tax cost of the plan.
Enter the Cash Balance Contribution in this field as an override to the formulas entered under Classes. Leave this blank if you want the formulas to calculate the Cash Balance Contributions.
This is the cash balance credit interest to be used in the Plan.
Cash Balance amount or percent applicable to the employee. This value will be a percent or a dollar amount depending on the selection of the option: ()% or ()$.
These contributions are an option that employers can provide. Participants who are age 50 and older or who will attain age 50 by the end of the calendar year are eligible to make catch-up contributions provided they exceed any of the applicable limits. The limits include the annual elective deferral limit ($23,000 in 2024), section 415 annual additions limit ($69,000 for 2024), any employer mandated limit, or an ADP test limitation.
Choosing Yes or No will set the catch-up provision for all participants who are eligible. User Defined allows the user to specify which participants will take advantage of the provision in the census.
Classes are used to separate or group the plan's employees
The assigned code to the class.
Default Classes: (3 Classes are automatically created)
Class A - Owners who are Highly Compensated Employees (HCEs)
Class B - Non-Highly Compensated Employees (NHCEs)
Class C - Non-owner HCEs
The default for Class A: equal Cash Balance contributions for all members based on the maximum cash balance contribution allowed the youngest owner and a Profit Sharing contribution of 2%.
For Class B, the default is a Cash Balance contribution of 2.5% and a Profit Sharing contribution of 4%.
And for Class C, a Cash Balance contribution of 5% and a profit sharing contribution of 5%. All these formulas are subject to overrides entered in columns "O" and "P".
The description of the class.
By default, when a new plan is setup, all owners are assigned to Class A (the 'owner' class), others are assigned to Class B (the 'Non-owner NHCE) class and all others are assigned to Class C the Non-Owner HCE class). Learn more on Classes.
This option is used if you wish to combined mortality table computation.
This is a selection of contribution type: Fixed Contribution per Individual, Entire class gets the same percent as the 415 mas for youngest.
The date of birth of the employee. This date should result in an age between 13 and 90.
The employee's hired date. The Valid Date are between 1/1/1928 to 12/31/2009.
The day the employee is eligible to join the Plan. The date will be calculated based on the eligibility requirements entered in the Plan Specifications section. The user can override this field.
Deferral Override:
Deferral amount or percent applicable to the employee. The deferral percentage in the Plan Specification will only be used if this field were left blank. This value will be a percent or a dollar amount depending on the selection of the option: ()% or ()$.
This the expected percentage the owner(s) and the other employees will defer. You may override specific employees using the Census button and placing an appropriate dollar or percentage in the deferral column.
The Entity Type of the plan.
Exclude 401(k) or Profit Sharing:
This option is used to exclude 401(k) Deferrals and Profit Sharing Contribution in the report.
The following years of service may be disregarded for vesting purposes:
1.Service Prior to Age 18
2.Service prior to the Effective date of the Plan
This is used to exclude the selected option from the report calculations.
The family code of the employee.
A 5% owner's spouse (a non-owner) is an HCE by attribution. This is how the program knows who is related to whom. Participants with the same letters are related. At least one of the participants within a family should be a 5% owner. Families are from A to J.
The name of the company.
The first name of the employee.
This option allows you to use the funding for lump sum.
The gender (Male or Female) of the employee.
HCE Override:
The program will automatically determine who are Highly Compensated Employees based on their ownership percentage (5% or more means they are) or based on their compensation ($90,000 or more). The rules for determining HCE however is more complex than that. Family attribution with regards to ownership may apply and if he is an HCE last year, he is HCE this year. A top 20% Highest Paid Rule may also be used. This override should be used to take care of those situations when the employee is considered to be an HCE whether or not they are 5% owner or earning less than $90,000.
HCE Top Paid Group Limited to 20%:
Has an election been made to limit the number of Highly Compensated Employees to the top 20% of employees ranked by compensation?
This election does not apply to 5% owners who are Highly Compensated regardless of whether they are in the Top Paid Group.
The employee's number of hours worked. This is used in conjunction with eligibility if selected in Plan Specs. If blank, defaults to 1,000 hours.
How is your business taxed?
Your client is either taxed as a Corporation wherein owners (stockholders) are paid wages that are reported on W-2s or as an unincorporated business wherein all owners have Schedule C or K-1 incomes.
This option is used to ignore the 415 Limit for Cash Balance Allocation in the report.
This option is used if you wish to impute permitted disparity.
This option is used to include Cash Balance calculations to the Owner Only report.
Include Deferrals in Employers Cost:
This is used to include the owners' deferral and catch-up contributions in the Employer Cost calculation.
"Check to include 401(k)" option if the plan is Cash Balance only. This will disable the 401(k) tab.
This is the interest rate to be used in calculating the Cash Balance Plan.
The last name of the employee.
Limit Cash Balance allocation to PVAB:
This option allows you to limit the Cash Balance allocation to PVAB (Present Value Accrued Benefit).
The Last Year's Compensation of the employee. Used to determine who is an HCE. If blank, the current W-2 Earnings will be used.
This is the matching formula applicable to the Plan. Regular Match indicates a mandatory match as required by the plan. Select the safe-harbor option to automatically enter the default safe-harbor formula. Select the discretionary match option to enter any formula up to 3 levels deep.
Match Contribution amount or percent applicable to the employee. The match contribution override will be used for Match Contribution calculations. This value will be a percent or a dollar amount depending on the selection of the option: ()% or ()$.
Maximum Class to 415 limit will give each member of the Class the maximum cash balance contribution. This will usually different amounts per class member.
This is the age required to be a participant in the plan. If minimum age is 21, then entry date is assumed to be the 1st day of the Plan Year or 6 months later after age 21 is attained; otherwise, entry date is assumed to be the 1st day of the Plan Year following attainment of minimum age.
This is the service required to be a participant in the plan. If minimum service is 12 months, then entry date is assumed to be the 1st day of the Plan Year or 6 months later after completion of 12 months of service; otherwise, entry date is assumed to be the 1st day of the Plan Year following completion of minimum service.
The new law allows a normal retirement age as early as age 62 with no actuarial reduction to the current pension dollar limit of $160,000/yr ($13,333/mo.). The calculator will always use the retirement age you entered but it will not allow any participant to retire less than 5 years from entry date. For example, if a participant is already 58 and the Normal Retirement Age you entered is 62, his retirement age will be 63. NRA should never exceed 65. This Retirement Age is for Defined Benefit Plans only.
5% or more owners are Highly Compensated Employees (HCE).
The past service of the employee.
The employee's ownership. Valid input between 0 and 100.
The Company's Plan Description.
The Plan Effective Date is always the beginning of the Plan Year. Ages are calculated as of this date. However, all contributions are determined as of the end of the Plan Year. Unless you want the Plan to be effective next year, you should use '01/01/2010'.
The Company's Name can be as long as 75 characters.
This is an interest rate that will be used with the selected mortality table. The rate must between 7.5% to 8.5%.
Choose a mortality table, which combined with the Post-Retirement Interest Rate, will determine the Annuity Purchase Rate (APR). The APR converts the projected contribution into a benefit in order to test the plan under the 401(a)(4) regulations.
This is an interest rate to project a current year contribution to retirement age (testing age). The current regulations stipulate using 7.5% to 8.5% as the allowable interest rate range.
This option allows you to use the pre-retirement mortality computation.
For reporting purposes, there are two groups: Principals and Non-principals and costs are aggregated and compared against each other. By default all Owners are Principals. You may assign any employee to the Principal group. An HCE who is one because of his relationship to a 5% owner is not a principal by default.
This is the Profit Sharing Contribution override to the formulas entered under Classes. Leave this blank if you want the formulas to calculate the Profit Sharing Contributions.
Profit Sharing amount or percent applicable to the employee. This value will be a percent or a dollar amount depending on the selection of the option: ()% or ()$.
The name of the person who prepared the report.
This option enables you to select the 3% or 4% Non-Elective contribution instead of a safe-harbor match.
Safe Harbor Contribution Override:
Safe Harbor Contribution amount or percent applicable to the employee. The safe harbor contribution override will be used for Safe Harbor Contribution calculations. This value will be a percent or a dollar amount depending on the selection of the option: ()% or ()$.
This option is used to include your report logo to this plan.
"Check to display Start-Up Tax Credits on Tax Summary Report" option if you want to show the Start-Up Tax Credits on the Tax Summary Report.
These tax rates are used in the Tax Summary Report to estimate the after tax cost of the plan.
Taxed as:
Your client is either taxed as a Corporation wherein owners (stockholders) are paid wages that are reported on W-2s or as an unincorporated business wherein all owners have Schedule C or K-1 incomes.
This field is used for Non-Discrimination testing if the 401(k)/PS Retirement Age is greater than the Retirement Age for the Cash Balance plan. It can never be less than the Retirement Age.
This represents the non-forfeitable interest of participants in their account balances under a defined contribution plan or accrued benefits under a defined benefit plan and is directly related to an employee's length of service with the employer.
Will Plan be covered by PBGC?:
This is an option if the Plan will be covered by PBGC (Pension Benefit Guaranty Corporation).
The W-2 Earnings of the employee. It must be an amount between 0 to 10,000,000.
This is the interest rate used for Rate 1 (Years 0-5).
This is the interest rate used for Rate 2 (Years 6-20).
This is the interest rate used for Rate 3 (Years > 20).