Forecasting Defined Contribution Account Balances

Forecast the future account balance of a defined contribution plan based on an employee's contributions and company match contributions. Compare different future balances by assuming different contributions.

To forecast defined contribution account balances

  1. Access Defined Contribution Forecast (BN67.1).
  2. Use the following guidelines to enter field values:
    Annual Salary

    If contributions are a percent of salary, type the employee's salary for the forecast.

    Salary Increase

    Type a percent that the salary increases for each year of the forecast. For example, for 7% type 7 in the field.

    Current Balance

    To include the employee's current account balance, type the employee's account balance.

  3. In the Annual Contribution section, use the following guidelines to enter field values:
    Percent or Company Match Percent

    If the forecast is based on a contribution defined as a percent of annual salary, type the employee contribution percent.

    If the plan has a company match limit that is a percent of an employee's annual salary, type that limit.

    Amount

    If the employee's annual contribution is a flat dollar amount, type the annual contribution.

    Limit

    If the plan has a company match limit that is a percent of an employee's annual salary, type that limit. For example, if the company contributes up to 4 percent of an employee's annual salary, type 4.

  4. In the Return section, use the following guidelines to enter field values:
    Rate of Return

    Type an average annual rate of return or the interest rate of the investment. The rate of return compounds annually.

    Years

    Type the number of years of the forecast. This is a required field.

  5. Select the Special Action, Calculate form function.