A retirement savings structure where the prior period’s ending value is carried over as the starting value for the subsequent period. This approach contrasts with other methods that might recalculate or reset values based on different criteria. Consider a scenario: if a participant’s account has a value of $10,000 at the end of one year, that $10,000 becomes the starting point for calculating investment gains or losses in the next year. No additional recalculation of the past account growth is performed.
This methodology offers administrative simplicity and transparency. Its benefits lie in its clear and easily understandable tracking of investment performance, as the entire existing balance is always considered when assessing future returns. Historically, this type of calculation has been favored for its straightforward nature, making it easier for both plan administrators and participants to comprehend the account’s progression over time.
