Age-Weighted Allocation Formula Clause Samples
An age-weighted allocation formula is a method used to distribute benefits or contributions in a plan based on the age of participants. In practice, this formula assigns greater value or a higher percentage of allocations to older individuals, reflecting their shorter time horizon until retirement. This approach ensures that older participants receive allocations that are more closely aligned with their retirement needs, addressing the issue of fairness and adequacy in benefit distribution among employees of varying ages.
Age-Weighted Allocation Formula. If the Age Weighted Allocation method is elected in the Adoption Agreement, the total Employer contribution will be allocated to each eligible Employee such that the equivalent benefit accrual rate for each Participant is identical. The equivalent benefit accrual rate is the annual annuity commencing at the Participant’s testing age, expressed as a percentage of the Participant’s Compensation as defined in section 14.39 of the Plan which is provided from the allocation of Employer contributions and forfeitures for the Plan Year, using standardized actuarial assumptions that satisfy section 1.401(a)(4)-12 of the Income Tax Regulations. The Employee’s testing age is the later of Normal Retirement Age, or the Employee’s current age.
Age-Weighted Allocation Formula. The Employer Contribution for the Plan Year will be allocated to each Eligible Participant in accordance with the age-weighted allocation formula described in Section 2.2(b)(5) of the BPD. Under the age-weighted allocation formula, the Employer Contribution is allocated on the basis of each Eligible Participant’s Normalization Factor. A Participant’s Normalization Factor is the Participant’s Included Compensation multiplied by the Actuarial Factor determined under Exhibit A of this Agreement. In determining a Participant’s Actuarial Factor, the following assumptions apply:
Age-Weighted Allocation Formula. In proportion to their Allocation Factor. The Allocation Factor shall be equal to the product of the Participant’s Age Factor and the Covered Participant’s Compensation. The Age Factor is derived from Schedule I based on the following interest rate: o 7.50% o 8.00% o 8.50% Thus, the allocation of the Employer Base Contribution to a Participant’s Employer Active Account shall equal the total Employer Base Contribution multiplied by a fraction the numerator of which is the Covered Participant’s allocation factor and the denominator of which is the sum of the Allocation Factors of all Covered Participants.