Benefit Allocation Method

Benefit Allocation Method

A way to finance a retirement plan in which an employee pays a certain amount or percentage of salary each year that the company uses to fund benefits equal to the contribution. These contributions continue each year until retirement (or until the employee leaves the company). In other words, the benefits are based on an average of an employee's salary over time. The benefit allocation method gives more highly compensated employees more benefits in retirement because those employees paid more into the system.
References in periodicals archive ?
An examination of the "unit allocation method," the "benefit allocation method" and the various "hybrid allocation methods" will serve the real estate developer well in maximizing the tax savings of deducting the future common improvement costs.
The "benefit allocation method" can be used when it can be determined which particular parcels benefit the most from the common improvement cost.
For example, in a project, streets might be allocated on a pro rata basis and the lakes might be allocated using the "benefit allocation method."