Defined Contribution Allocation Reminders

Below are a few reminders that relief associations with a defined contribution plan should keep in mind as the year-end allocation tables are being prepared:

  • To the extent possible, please be sure to provide exact fire department entry and separation dates for members on the allocation table, and correct member birth dates. Sometimes, relief associations report January 1 as the fire department entry date for members, even though the members started on various dates throughout the year. Even if a relief association’s bylaws do not allow members to receive allocations for partial years of service, it is important to provide actual entry and separation dates to properly track a member’s length of service for vesting purposes.
  • Relief associations may only provide allocations to members who are active for partial years (rather than an entire calendar year) if the bylaws specifically allow for the monthly proration of service credit. If the bylaws authorize the monthly proration of service credit, members receive contribution and other allocations for each completed month of active service. If the bylaws do not authorize the monthly proration of service credit, members receive allocations only if they were active for the entire calendar year.
  • Investment management fees should be deducted on a pro rata basis from the accounts of all members who shared in investment earnings or losses during the year.
  • Defined contribution plans that do not currently credit deferred members with interest or additional investment income should monitor the progress of the State Auditor’s Working Group legislation (see page one of this Newsletter). The legislation, if passed into law, would require these deferred members to be credited with interest or additional investment income and, would apply to currently deferred members.

Additional information about allocations and deductions for defined contribution plans is provided in a Statement of Position on this topic.

Published last in the February 2020 Pension Newsletter