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.
• Inactive members are required to receive investment allocations on a pro rata basis in the same manner as active members.
• Beginning January 1, 2021, all deferred members, including members who separated from active service prior to 2021, are required to receive deferred interest or additional investment income. If a deferred interest option is not specified in the relief association’s bylaws, the default option is full gains and losses, the same allocation method as active members. Unless a different credit method is defined in the relief association's bylaws, deferred members are credited with investment allocations from the date they separate from active service until the last valuation date immediately before the member receives the final portion of their service pension.

Additional Resources

Additional information about allocations and deductions for defined contribution plans is provided in a Statement of Position on this topic. More information on deferred interest types and credit methods for defined contributions plans can be found in a training video on this topic and in a Statement of Position on this topic.

Last Updated April 2025