Average Earnings Provision
An Average Earnings Provision defines the earnings units, selection rules, limits, and exclusions that apply during an effective period.
The Basic tab contains the settings below. Use Partial Period Rules for incomplete units and Dropout/Adjustment Rules for threshold tests and adjustments.
- Period:
- Effective Date: Defines the first date for which the provision applies.
- Stop Date: Defines the last date for which the provision applies. Select None to leave the provision open-ended.
- Earnings precedence:
- Highest: Selects the highest individual earnings units within the lookback period.
- Highest Consecutive: Selects the consecutive block with the highest average.
- Final: Selects the final eligible units within the lookback period.
- Averaging/lookback:
- Averaging Period: Specifies the number of units included in the average. Use the Partial Period Rules screen to define how incomplete first, interim, and final units are treated.
- Career: Includes every eligible unit in the average.
- Lookback Period: Specifies the number of units searched when selecting earnings.
- Career: Removes the fixed lookback limit.
- Unit: Selects the time unit used to construct and average earnings periods.
- Group units by year: Combines shorter units into annual groupings before applying Earnings Precedence.
- Averaging Period: Specifies the number of units included in the average. Use the Partial Period Rules screen to define how incomplete first, interim, and final units are treated.
- Averaging period determination:
- Determined using service definition: Includes periods in which the selected Service Definition accrues.
- Name: Selects the Service Definition used to determine eligible periods.
- Determined without regard to any service definition: Measures eligible periods back from the input calculation date without requiring service accrual. This selection is commonly used for valuation extracts and does not calculate average amounts beyond the calculation date.
- Determined using service definition: Includes periods in which the selected Service Definition accrues.
- Averaging unit determination:
- Periods occur at regular intervals as defined by the following: Creates fixed units using a calendar anniversary.
- Calendar Anniversary: Defines the recurring boundary for the averaging units.
- Month: Specifies the calendar-anniversary month.
- Day: Specifies the calendar-anniversary day.
- Calendar Anniversary: Defines the recurring boundary for the averaging units.
- Create units backward from term date (rounded as follows): Builds units backward from the termination date.
- Type: Selects the rounding type applied to the termination date.
- Unit: Selects the unit used when rounding the termination date.
- Create using Service Definition: Uses the measurement periods created by the selected Service Definition.
- Periods occur at regular intervals as defined by the following: Creates fixed units using a calendar anniversary.
- Earnings limits:
- Static Limits: Applies fixed limits to each earnings unit.
- Minimum: Specifies the fixed minimum amount. Select None to remove the minimum.
- Maximum: Specifies the fixed maximum amount. Select None to remove the maximum.
- Variable Limits: Applies effective-dated minimum and maximum amounts.
- History: Opens the effective-dated limit history.
- 401(a)(17) Limits Apply: Applies the statutory compensation limit to each earnings unit.
- Prorate limits for partial annual periods: Reduces applicable annual limits in proportion to a partial period.
- Static Limits: Applies fixed limits to each earnings unit.
- Period exclusions:
- Exclude Breaks in Service when measuring periods: Prevents break-in-service units from consuming the averaging period.
- Exclude periods under threshold when measuring lookback: Prevents units excluded for falling below the configured threshold from consuming the lookback period. Use the Dropout/Adjustment Rules screen to define zero-earnings, threshold, and adjustment rules.
- Exclude Zero Earnings Periods when measuring lookback: Prevents zero-earnings units from consuming the lookback period.
- Ignore partial excluded periods when measuring lookback: Prevents excluded partial units from consuming the lookback period.
- Reported Amounts: Lists the earnings sources included in the provision. Open the Average Earnings Reported Amount screen to configure a row's source, combination, allocation, annualization, limits, and formula overrides.
- Advanced: Opens the Average Earnings Provision - Advanced screen for compensation-limit treatment, final termination date adjustments, and other period-construction options.
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