The Average Earnings Provision Screen is used to define the rules for calculating average earnings during the provision period.

• Period: defines the period for which the provision is effective. If there is no stop date, check the None box.
• Earnings Precedence: defines how to evaluate earnings when determining the average. The following options are available:
  
  
  • Highest: averages the highest of any periods during the lookback period.
  • Highest Consecutive: takes the highest consecutive average of all consecutive averages during the lookback period.
  • Final: takes the final earnings and averages them.
• Averaging Period: the number of units to include in the average.
• Lookback Period: the period to look at when determining each average.
• Unit: the unit of time being averaged (year or month for example). Check the box Group units by year to use year groupings when determining Earnings Precedence
• Averaging Period Determination: defines how to determine the period during a participant's employment with a sponsor that units that are eligible to be averaged:
  
  
  • Determined using service definition: looks at periods based upon when a particular service definition accrues.
  • Determined without regard to any service definition: looks at periods back from the input calculation date regardless of whether or not a participant is employed. This selection is traditionally only used for Average Earnings Definitions that are to be used for valuation extract and will not calculate average amounts beyond calculation date input.
• Averaging Unit Determination: area used to define how, once the averaging period is known, to determine the units to use in the average.
• Periods occur at regular intervals as defined by the following: this is the most common method. Used when earnings are looked at for fixed interval (calendar year for example). For this method, you must also define the Calendar Anniversary on which to begin the period (1/1 or 7/1 for example).
• Create units backward from term date (rounded as follows): choose this method if averaging period is determined backwards from termination date, and set the rounding rules.
• Create using Service Definition: use this method if averaging period should strictly follow the units developed for a service definition which uses sub-periods to determine service amount. This method is generally only used if the service measurement periods and corresponding average earnings changed plan year.
• Earnings Limits: area to define limits on each individual averaging unit.
• Static or Variable Limits: this area allows you to specify defined minimum and maximum values for each averaging unit.
• Static Limits: select this option if there are minimum or maximum values that never change during the provision period. If the value of a unit falls below the minimum value, it will equal that minimum for purposes of determining the average. Similarly, if the value of a unit exceeds the maximum value, it will equal that maximum for purposes of determining the average. If there is no minimum or maximum, check the None box.
• Variable Limits: this option allows you to specify both minimum and maximum values but also lets these values vary over time within the provision period. To specify the variable limits, press the History button.
• 401(a)(17) Limits Apply: check this box if 401(a)(17 limits apply to each unit.
• Prorate limits for partial annual periods: check this box to prorate the chosen limits during partial periods.
• Period Exclusions: this area allows you to indicate which periods, if any, should not be included when counting the units to be used in the lookback period.
• Exclude Breaks in Service when measuring periods: check this box if units during which there is a break-in-service should be excluded when measuring lookback.
• Exclude Dropout Periods when measuring lookback: check this box if units which have been dropped out of the average (failed to meet an hours requirement in a year for example) should be ignored when measuring lookback.
• Exclude Zero Earnings Periods when measuring lookback: check this box if units during which no earnings were paid should be ignored when measuring lookback.
• Ignore partial excluded periods when measuring lookback: if units are excluded because they are partial, check this box if these periods should not be included when measuring lookback.
• Reported Amounts: this area allows you to add, delete and edit (by double clicking a row in the reported amounts list) reported amounts. To view help on the Reported Amounts screen, click here.
• Advanced: press this button to view advanced Average Earnings Provisions as shown on the Average Earnings Provisions - Advanced screen.