Defining vesting and covered compensation information

The Benefits application tracks vesting hours using the plan year, calendar year, or employment year. Vesting hours are tracked for all eligible employees even if the employee is not currently enrolled in a defined contribution or defined benefit plan.

Use this procedure to define a Defined Benefit or Defined Contribution plan:

  1. Select Benefits > Plans > Benefit Plans and click Create.
  2. In the Compensation section, specify this information:
    Pay Class

    Select the pay class that defines each employee's covered compensation for the plan year. Pay Class is used to calculate the employee's compensation history which comes from the benefit hours worked import. The compensation history is used in the Hours of Service report. The application tracks covered compensation for comparison against the annual limits defined in Set Up > Annual Limits. Covered compensation is not used to calculate contribution amounts.

    If you leave this field blank, all compensation is included as an employee's covered compensation for the plan year.

  3. In the Vesting section, specify this information:
    Vesting Schedule

    Select a vesting schedule for the plan. A vesting schedule is a table that defines when a company's contributions become non-forfeitable to an employee.

    Computation Year

    Select the type of year that is used to determine the vesting computation period.

    • If you select Calendar Year, the vesting computation period begins on the January 1 and ends on December 31.

    • If you select Employment Year, the vesting computation period is based on the employment date defined in the Vesting From Date. The From Date can be defined as an employee's hire date, adjusted hire date, anniversary date, and so on.

    • If you select Plan Year, the vesting contribution period is based on the month and day of the plan start date. Closing the payroll cycle updates vesting based on this field.

    100 Percent Vested Age

    Specify the age at which an employee becomes 100 percent vested.

    From Date

    If this is a defined contribution or defined benefit plan, select the date on which vesting begins for each employee enrolled in the plan.

    Count Prior Years

    Select whether the vesting calculation includes the years an employee has worked before the plan start date. For example, an employee was hired in 1962 and the defined contribution plan began in 1982. If this check box is selected, vesting includes the 20 years from 1962 to 1982. If check box is cleared, vesting calculation begins from 1982.

    Annual Hours

    Specify the minimum number of hours an employee must work in a plan year to vest another year. Employees do not vest for any year during which they work less than the minimum number of hours.

    Pay Class

    Select the pay class that determines each employee's vesting hours for the plan year. If you leave this field blank, all hours are included for vesting calculations.

  4. In the Reporting section, you can view these self-evident fields:
    Active Last Day

    Display only.

    Account Balance Reporting Type

    Display only.

    Contribution

    Display only.

    Break In Service

    Display only.

  5. Click Save.