Accrued benefits


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Related to Accrued benefits: Accrual Rate

Accrued benefits

The pension benefits earned by an employee according to the years of the employee's service.

Accrued Benefits

The pension, vacation, or other benefits that an employee earns in the course of a year. This is effectively income that the employee is not paid immediately. For example, an employee may accrue vacation benefits, but rather than receiving a check for the benefits, he continues to be paid his regular salary when he goes on holiday. If the employee is terminated or retires, he must be paid all previously unpaid accrued benefits.
References in periodicals archive ?
(1) The IRS has provided guidance as to when a change in actuarial factors will indirectly affect accrued benefits, as well as acceptable methods for preventing a violation of the vesting rules as a result of such a change.
ERISA Section 203(a)(1) states that an employee's accrued benefit derived from his own contributions must, at all times, be nonforfeitable.
Generally, the unit credit (accrued benefit) method is used in determining the net periodic pension cost, regardless of the actuarial method used by the plan.
For cash balance or hybrid plans, the accrued benefit may be expressed as an annuity payable at retirement age, the balance of a hypothetical account, or the current value of the cumulative percentage of the employee's final compensation.
Most importantly, for cash balance or hybrid plans, the accrued benefit may be expressed as an annuity payable at retirement age, the balance of a hypothetical account, or the current value of the cumulative percentage of the employee's final compensation.
This situation arises because the cash balance plan formula creates an initial balance that is below the employee's accrued benefit. Thus, until the individual cash balance catches up to the accrued benefit, the employer is not required to make any new contributions to the employee's cash balance plan account.
Replacing a traditional defined-benefit pension plan with a cash-balance plan raises a number of complicated and unsettled legal issues under the Internal Revenue Code (IRC), the Employee Retirement Income Security Act of 1974 (ERISA), and the Age Discrimination in Employment Act (ADEA) These legal issues fall into four primary categories: (1) protection of accrued benefits, (2) rate of benefit accrual, (3) age discrimination, and (4) notice requirements.
The bond was placed in the worker's account and its amount was set so that, at retirement, it would be equal to the worker's accrued benefits under the old system.
Employers must treat reemployed employees as if they had not incurred breaks n service for purposes of pension plans, include military service for purposes of vesting and benefit accrual, and provide accrued benefits from employee contributions to the extent that employees pay them.
A critical distinction between termination benefits and retirement benefits is that accrued benefits automatically vest upon satisfying the age and service requirements for retirement benefits, yet are subject to the plan's vesting schedule when those conditions have not been met.(16) Perhaps the most important distinction under family law is that the earned retirement benefit, which uses salary in its definition, was protected against the erosion of inflation to the date when benefits began, whereas the earned termination benefit was not.
Accordingly, the final regulations generally provide that a defined contribution plan does not violate the requirements of section 411(d)(6) merely because the plan is amended to eliminate or restrict the ability of a participant to receive payment of accrued benefits under a particular optional form of benefit if, after the plan amendment is effective with respect to the participant, the alternative forms of payment available to the participant include payment in a single-sum distribution form that is otherwise identical to the optional form of benefit that is being eliminated or restricted.