Calculate Contributions

• 1). Each plan document clearly outlines the formula to be used in calculating benefits. Review the document and identify the formula and any requirements, such as age or years of service, which may alter the benefits. Additionally, note the frequency of the contribution, it may be just annually; however, in some cases it is more frequent which is important to know.
  
  
• 2). Apply the formula to your own salary, either last year to determine the upcoming contribution you can expect, or to an estimated salary for planning purposes. If the plan formula contains information that you do not have, such as Social Security tables or total employee compensation, make a list of these items. Take the list to you Human Resources representative and ask him or her to supply the information.
  
  
• 3). The two most common methods are a fixed percentage of your salary, for example 2 percent of your annual salary. If you earned $40,000 last year that would amount to $800. The next most common method is where a company defines the total amount they want to contribute for all employees and allocates it on a pro-rata basis. For example, if the company said they wanted to contribute $500,000 in total, you would then need to know the total compensation for all participants in the plan, which your Human Resources office can provide. If you earned $40,000 and the total company payroll was $2 million, then you would receive 2 percent ($40,000/$2,000,000) of the $500,000 contribution, or $10,000.
  
  
• 4). The next most common formula is a points based system where you total your age and years of service. If you were 57 and worked for the company for 13 years, your score would be 70. In these formulas, it is common for those with a score of less than 65 to have different benefits than those with a score of over 65. So its important to understand the formula and ask your company if you have questions.