What Type Of Retirement Plan Is Based On A Formula? 
All group retirement plans that are covered by the Employee Retirement Income Security Act ERISA are based on some formulaic process . This formulaic process is used to ensure against discrimination in the plan . Federal law defines discrimination as a plan that too heavily favors highlight compensated employees . Highly compensated employees are employees who earn over a certain amount in annual income , as of 2013 that amount is $ 115,000 . 