Index Definition

The prompts discussed below allow for defining the index and how it is applied to the accounts.

Historical Index

Select between either Index or Blend of Indexes. The first one will allow you to select a single index to use for rates of return. Blend of Indexes requires you enter the allocation (percent) of each index in the grid for the respective index.

Note:When using Blend of Indexes, if the total of the allocation column does not equal 100%, TRAK will weight each one by dividing the percent of each one by the total percentage. For example, if only two indexes are assigned 25% and 50%, the first index would use a 33.3% weighting (25% divided by of a total of 75%) and the second index would use a 66.6% weighting (50% of a total of 75%).
When using a blend, the time period will be limited to the shortest time period. For example, selecting both the Wilshire 2500 Growth Index [Jan 1992-] and the Wilshire 5000 Total Market Index [Jan 1971-], the analysis would be limited to starting in January, 1992.

Accounts Using Index

By default, the index is applied to all cash balance accounts (including Retirement Investment, employer plans, and cash balances options for defined benefit plans. To unselect specific accounts, select Selected Accounts and un-check the accounts not to apply the index.

Time Period

To apply the index to the accounts only during retirement, select Retirement Years Only. To apply the index starting immediately through retirement select Now Through Retirement.

Note:At publication TRAK includes 15 Wilshire indexes. For enterprise licensing the indexes can be fully customized. Contact RetireReadyTM for additional information.
For defined benefit plans with cash balances, the rates of return from the index(es) will only apply during retirement years.

Historical Data

This allows for selecting when the rates of return in the historical index are to be started. To select all historical data select Use All Available Historical Data otherwise select Use Historical Data Starting and enter the year to start the historical data.

Rate of Return Limits on Index

Apply Rate of Return Limits

Applying Rate of Return Limits on Index allows illustrating an annuity, If this is checked, various account limits are available that apply to the index. Each option is discussed below.

Monthly Cap

Enter the maximum monthly rate of return that the account can earn.

Annual Cap

Enter the maximum annual rate of return that the account can earn.

Annual Spread

Enter the spread (reduction) on the annual rate of return applied to the account.

Participation Rate

This is the percent that the account participates in the increase in the account. For example, with a participation rate of 80% and a 10% increase in the index, the account would have an 8% credit.

Average Monthly Rate

This will average the monthly rate of return for the months (possibly reducing the compounded growth).

Annual Minimum Rate of Return

Enter the minimum rate of return. Annuities typically have an Annual Minimum Rate of Return of 0%. Some some annuities may have a different minimum rate of return.

Annual Fee

Enter the annual fee to apply to the account(s) using the index.