Defined Contribution Retirement Plans

Header Message



The prompts that appear may be different than listed below, depending on the properties of the selected retirement plan:

Pre-Tax Account Balance

Enter the current retirement plan account balance.

Pre-Tax Elective Contribution

Enter the employee's elective contribution to the retirement plan. If the prompt shows a percent sign, enter the percent of pay. If it prompts for a dollar amount, enter the contribution per paycheck.

Notes:Using the drop-down menu on the right side of the editor (or pressing Ctrl-Down Arrow when the editor is focused), the Contribution Method can be configured method can be changed to one of three methods: Percent of Income (default method), Dollar per Paycheck or Maximum.
The Maximum contribution method calculates the maximum contribution a participant can make per paycheck by dividing the annual contribution limit by the number of paychecks. It does not take into consideration year to date contributions made to the retirement plan.
If the Maximum method is not selected, the Contribution Increase Method can be configured to be No Increase (default method), or one of two methods to increase when the client receives a raise. The methods are Increase Contribution by Value or Increase Contribution by Percentage (explained below). To configure the contribution method or increase method, click on the down arrow on the right side of the Pre-Tax Elective Contribution editor (or press Ctrl-Down Arrow for the menu to appear).
Notes:If a Roth account is available  and Maximum is selected for both the pre-tax and Roth account, the % of Max. to Pre-Tax Account prompt will appear. Enter the percentage to contribute to the pre-tax (the remainder will contribute to the Roth).


If a Roth account is available, and Maximum is selected as the for only one of the accounts, then the deposits to account that does not have Maximum selected will be made first, and the remaining contribution (which is calculated by dividing the annual contribution limit by the number of paychecks) is made to the account with the Maximum method selected..

If Contribution Increase Method is checked (in the drop-down menu of the Pre-Tax Elective Contribution editor), two additional prompts will appear (which depend upon both the Contribution Method and the Contribution Increase Method): The increase in contribution occurs when the individual is schedule to receive a raise (configured in the Expected Average Raises prompt).

Annual Increase in Percent

This prompt is available when for Contribution Method is Percent of Income and the Increase Method is Increase Contribution by Value.

Annual Percentage Increase

This prompt is available for both contribution methods but only when the Increase Method is Increase Contribution by PercentFW

Annual Increase per Paycheck

This prompt will appear if the Increase Contribution by Value is selected for the Contribution Increase Method in the pop-up menu under the Pre-Tax Elective Contribution prompt (above).

Enter the annual increase in the value of the contribution.

Annual Percentage Increase

This prompt will appear if the Increase Contribution by Percentage is selected for the Contribution Increase Method in the pop-up menu under the Pre-Tax Elective Contribution prompt (above).

Enter the percent to increase the annual contribution.

# of Years

Enter the number of years that the increase in contributions are to occur.

Examples:The table below shows how increases to contributions affect the two different contribution methods (Percent of income and Dollars per Paycheck). The examples assume that the # of Years prompt has a value of at least 3.

Percent of Income

Dollars per Paycheck

Increase Method Value

(1%) Percentage

(10%) Value

($25) Percentage


Current Contribution





With Next Raise





With 2nd Raise





With 3rd Raise





Change Future Contributions

If contributions will change in the future (e.g. a client may want to illustrate maximizing their contributions in the future when their house is paid off), selecting this option from the down arrow menu will display additional prompts starting with the period of time the change will occur and how the contribution method will change.  If the plan also has a Roth account, future changes in contributions can also be set for that account individually.

Example:A client is making a contribution of $200 24 times a year. In five years, when their house is paid off, the client wants to maximize the contribution (and this illustration is being run July first). Suppose the annual contribution limit in 5 years is $30,000. The contribution will change from $200 to $1,250 per paycheck (calculated by dividing $30,000 by 24, which does not take into account the contributions made earlier in the year).
Note:This prompt is only displayed if the selected Retirement Plan allows for participant elective contributions.

Contribution Increase Method

Select the desired method of increase (either No Increase, Increase Contribution by Value, or Increase Contribution by Dollar).  If a method is selected, the following additional prompts will be enabled to Limit Increase:

Number of Years - Enter a limit to the number of years the increases will occur.

Maximum Increase - Enter a maximum increase limit.

Has Maximum Increase - to cap the total maximum contribution, select this option and enter a value.


Pre-Retirement Rate of Return

Enter the hypothetical rate of return earned on the money until retirement.

Note:The Pre-Retirement Rate of Return prompt is not available if a Glide Path is selected for the account.
The drop-down button to the right of the editor allows turning on Glide Paths for the account and also edit the Glide Paths (which can also be accessed in Setup/Config/Glide Paths from the ribbon bar). The Glide Path for the account is only available if Glide Paths is not configured for all retirement accounts (at the top of the input panel) and if Glide Paths are not turned off (in Setup/Config/Gap Analysis/Calculator)

Glide Path

Select the Glide Path for the account. Use the left down arrow to access the list of Glide Paths (or press the space bar to see the drop-down list).

To turn Glide Paths off, click on the right down-arrow (or press Ctrl-Down-Arrow) and un-check Use Glide Paths. Click on Edit Glide Paths to access the Glide Path configuration editor.

Employer Contribution Prompts

The Employer Contribution prompts below are only visible if the 401(k) Custom is selected as the Retirement Plan.

Employer's Contribution

This prompt will be displayed for define contribution plans that allow the employer contribution to be configured. To configure the employer contribution, click on the down arrow to the right of the edit window (or pressing any key while the editor is focused). The following prompts are displayed:

Quick Gap Defined Contribution Retirement Matching

The following prompts are in the employer contribution drop down window:

Employer Contribution

Employer Percent Match

Enter the percent of the employee's contribution that the employer matches.

Maximum Percent Match

Enter the maximum percent of the paycheck that the employer will match.

Examples: The following scenarios assume the employee contributes 5%:

1.If the employer matches 50% (Employer Percent Match) up to 4% (Maximum Percent Match), the employer will contribute 2% of the client's paycheck.

2.If the employee matching 100% (Employer Percent Match) up to 6% (Maximum Percent Match), the employer will contribute 2.5% of the client's paycheck.

3.If no value is entered for Maximum Percent Match then the employer matching contribution will always be 0%.

Employer % of Paycheck

Enter the percent of paycheck amount the employer contributes.

Employee Class

This prompt will be displayed for custom defined contribution plans (defined in Setup/Retirement Plans) with Employee Class method of profit sharing. Select the class of employee for the applicable profit sharing rate.

Retirement Distribution

There are various distribution methods for accounts with cash balances at retirement. The following is a list of the methods and brief descriptions. Note that all payout methods (except 'Annuitize') may be subject to RMD, which may affect the goal of the selected method.

Annuitize: This annuitizes the account over the life expectancy of the owner. The value entered is the payout in dollars per thousand per month.

Use Funds as Needed: Funds are distributed as needed.

The following distribution methods are categorized as restrictive distribution methods. This means that funds are not available for distribution if the restrictions on distribution have already been met.

Additionally, some distribution methods require a distribution (e.g. Annuitize and Percent of Account).

For Example: If the distribution method is Retain Principal, the distributions are limited to reducing the cash balance of the account to the value it was at retirement. In the Gap Analysis calculator's Setup tab, this may be configured to allow distributions from an account as a last priority in the Restricted Distribution dialog box.

Retain Principal: This limits distributions to the interest earned .

Amortize, no inflation: Equal payments are made over retirement years. The payment is calculated so that at life expectancy the account will be depleted.

Amortize, with inflation: Equal payments over retirement that are annual adjusted by inflation. The payment is calculated so that at life expectancy the account will be depleted.

Percent of Account: Requires a specific percent of the account balance to be paid out each year during retirement. If the need is less than the calculated annual distribution, the distributions may be less than the specified percentage.

RMD Only: Only Required Minimum Distributions are made from the account. Note that these are made on the last payment of the calendar year.

Dollar Value, No Inflation: A specified dollar distribution per month over retirement. No adjustments are made to the distribution.

Dollar Value with Inflation: A specified dollar distribution per month over retirement with annual inflation adjustments made to the distribution.

TSP Life Annuity: This option is available when working with the TSP Plan (or Federal Summary Account) in the Gap Analysis calculator. An additional prompt will be displayed to select which TSP annuity.

Summary of Retirement Payout Methods

Payout Method

Has Cash Balance

Restricted Distributions

Required Distribution





Use Funds as Needed




Retain Principal




Amortize No inflation




Amortize with inflation




Percent of Account




RMD Only




Dollar Value, No Inflation




Dollar Value with Inflation




TSP Annuity





Note:Unwanted/unused distribution methods can be hidden from the list in the File/Config/Gap Analysis/Calculator.

Rate of Return or Annuity Rate

Enter the Rate of Return (or Annuity Rate, depending upon the Payout Method selected) during retirement.

Note:        The Rate of Return prompt will not be displayed if a Glide Path is used for this account and the Glide Path includes a rate of return for retirement.

Annual Percent to Distribute

If the Payout Method is Percent Of Account, enter the percent of the account balance that will be paid out each year. The percentage is divided by 12 and that is the percentage of the balance that may be distributed each month.

For Example        A 3% payout rate, the monthly payout would be 0.25% of the account balance distributed each month.

Monthly Distribution Value

If the Payout Method is either Dollar Value, No Inflation or Dollar Value, with Inflation, enter the dollar value for the payout starting at retirement.