Plan Knowledge Base→AI Analysis→Calculation Engine→Immutable Audit Log→Administrator Review
SM
Captain Sarah Mitchell
Dept: Fire Department · Full-TimeID: P002Eligibility: Rule of 85 (55 + 30 = 85) ✓
55
Age
30
Years of Service
$125,000
Final Average Salary
Question Asked
Calculate Captain Mitchell's normal retirement benefit using the plan formula. She meets the Rule of 85 threshold — her age plus her years of service equals exactly 85.
What the AI Did
Read the plan benefit formula and compensation rules from the Plan Knowledge Base. Confirmed Rule of 85 eligibility. Checked the compensation definition against IRS requirements. Then sent a precise calculation instruction to the Calculation Engine — the AI itself never performed any arithmetic.
Retirement Benefit — Normal Retirement
$93,750per year
$7,812.50 per month
2.5% × 30 years of service × $125,000 final average salary = $93,750/yr
✓ No compliance issues found · Within the federal annual benefit limit
No names. No dollar amounts. No participant IDs. Just a cryptographic fingerprint.
Proof: SHA-256( local record #847 ) = a3f8b2c1d94e = Hedera sequence 847 message.chain_tail ✓ Tamper-evident. Publicly verifiable. Participant data never leaves your system.
Pending Administrator Review
Benefit Calculation — Captain Sarah Mitchell (P002)Normal retirement benefit: $93,750/yr · $7,812.50/mo · Rule of 85 · No compliance flags
All benefit calculations require plan administrator sign-off before the participant is notified. This approval is permanently logged and linked to the audit chain above.
DP
Sergeant David Park
Dept: Police Department · Full-TimeID: P003Status: Active · Not yet retirement-eligible
45
Age
20
Years of Service
$82,000
Plan Compensation
$113,000
Actual W-2
!
Compliance Issue Found HIGH SEVERITY
The AI identified a problem with how this plan defines "compensation." The plan counts only base salary ($82,000) — but Sergeant Park's actual earnings were $113,000 because he earned $31,000 in overtime. That $31,000 is being left out of his benefit calculation.
Why this matters under federal law: The IRS has three approved ways to define "compensation" in a pension plan. Under all three, overtime generally must be included — or the plan must use the full W-2 amount. A definition that simply excludes overtime does not qualify. This means the plan's formula may be systematically understating retirement benefits for every officer and firefighter who earns overtime pay.
⚠ This is not limited to Sgt. Park. Any plan participant who earns significant overtime may have an understated benefit projection. This is a plan-level drafting issue that requires actuarial and legal review.
What the Plan Says
Plan compensation definition: "Base salary only — overtime, shift differentials, and supplemental pay are excluded."
This definition was used to calculate the Final Average Compensation (FAC) figure in the benefit formula. The result: Sgt. Park's pension is calculated on $82,000 instead of his actual $113,000 in wages.
What the IRS Requires
Plans that want to use a simplified compensation definition must adopt one of the IRS "safe harbor" definitions. All three approved alternatives include overtime or use the full W-2 amount. Excluding overtime outright does not qualify under any of them.
Plans with a non-qualifying definition face additional annual testing requirements — and benefit calculations may need to be corrected retroactively.
Federal Dollar Limit Check (separate from the compensation issue)
Proposed Annual Benefit
$41,000
2026 Federal Dollar Limit
$285,000
$41,000 is below the $285,000 federal limit — PASS on dollar limit
The compensation definition issue is separate and still requires corrective action.
The compliance finding — including severity, dollar gap, and participant — is not on this record. Only the hash.
Proof: SHA-256( local record #862 ) = f9c2a7e3b14d = Hedera sequence 862 message.chain_tail ✓ Tamper-evident. Publicly verifiable. Participant data never leaves your system.
Pending Administrator Review — Compliance Finding
HIGH — Compensation Definition Review RequiredPlan compensation definition excludes overtime and does not qualify as an IRS safe harbor. All overtime-earning participants may have understated benefits. Recommend actuarial review before the next benefit statement cycle.
This finding is time-stamped and logged. Any decision — including deferral — is permanently recorded and linked to the audit chain for fiduciary documentation purposes.
Year-End Accrual Processing — Plan Year 2026
Participants Processed
5
Total Employee Contributions Recorded
$32,690
Contribution rate: 7% of base salary per participant · Plan year: 2026
✓ All 5 participants processed successfully · No compliance flags in this batch · Audit log anchored
Chain tail: 7b3d9f2e6a1cThe entire batch is logged as a single atomic event. The year-end audit package includes this chain hash as proof of completeness.
⬥ What the Public Ledger Contains
This is the complete Hedera HCS record. Anyone can read it.
Five participants, seven log entries, $467,000 in combined salaries — none of it is here. Only the count and the hash.
Proof: SHA-256( batch record #878 ) = 7b3d9f2e6a1c = Hedera sequence 878 message.chain_tail ✓ Tamper-evident. Publicly verifiable. Participant data never leaves your system.
Pending Administrator Review — Year-End Batch
Plan Year 2026 Accrual — 5 ParticipantsAll calculations complete · $32,690 total contributions recorded · No compliance flags in this batch
Approving this batch locks the plan year records. Individual corrections after approval require a separate amendment process, which is also logged.
AJ
Firefighter Alex Johnson
Dept: Fire Department · Full-TimeID: P010Note: Also works part-time for Riverside Township Fire Dept.
40
Age
16
Years of Service
$72,000
Millbrook Salary
$18,000
Riverside (Part-Time)
Question Asked
Firefighter Johnson works full-time for Millbrook FD and part-time for Riverside Township FD. Do his pension benefits from both employers need to be combined when checking the federal annual limit?
AI Answer — Citing Federal Law
The Rule (Internal Revenue Code §415(f)): When a participant earns pension benefits from more than one plan, the benefits from all plans must be added together. The total combined benefit must stay within the federal annual limit — not each plan individually.
Applied to Firefighter Johnson: • Millbrook FD benefit: 2.5% × 16 years × $72,000 = $28,800/year • Riverside Township FD benefit: calculated separately based on part-time service at $18,000/yr • Both amounts must be added together when checking against the federal limit • 2026 federal limit: $285,000/year or 100% of highest three-year average pay — whichever is less
✓ Answer: Yes — aggregation is required under federal law. At Johnson's current benefit levels he is well within the limit. This should be rechecked annually as his years of service increase at both employers.
Chain tail: 2e7a5d9b3f8cEvery legal citation used in this answer is permanently logged. The answer given and the sources used cannot be altered after the fact.
⬥ What the Public Ledger Contains
This is the complete Hedera HCS record. Anyone can read it.
The question asked, the answer given, the participant name, and the legal citations are not here. Only the hash.
Proof: SHA-256( local record #891 ) = 2e7a5d9b3f8c = Hedera sequence 891 message.chain_tail ✓ Tamper-evident. Publicly verifiable. Participant data never leaves your system.
Dual Employment Guidance — Firefighter Alex Johnson (P010)Aggregation required under IRC §415(f). Current benefit within limits. Flag for annual review as service years accumulate.
This answer is sourced from the plan's knowledge base and cited federal regulations. It is informational, not legal advice. Consult plan counsel before taking action based on this guidance.
RH
Chief Robert Harmon
Dept: Police Department · Full-TimeID: P001Marital Status: Married
58
Age
32
Years of Service
$275,000
Final Salary
90
Rule of 85 Score
✓ Eligible
Retirement Status
Rule of 85
Retirement Type
Joint & Survivor
Default Payment Form
Retirement Benefit
$220,000per year
$18,333 per month · Chief Harmon's benefit
2.5% × 32 years × $275,000 final salary = $220,000/yr · Within 2026 federal limit of $285,000
Spouse Survivor Benefit (Joint & Survivor 50% — Default for Married Participants)
$110,000 per year to surviving spouse
Chief Harmon may waive this election with his spouse's written, notarized consent. If waived, his monthly benefit increases — but the spouse survivor protection is removed.
Required Steps Before Distribution Begins
📋
Tax Notice Required (IRS 402(f)) — Chief Harmon must receive a written explanation of his rollover rights, mandatory tax withholding, and tax consequences before any distribution is paid. A 30-day waiting period begins after the notice is provided.
📝
Spouse Consent Required (if waiving survivor benefit) — If Chief Harmon elects to receive 100% of his benefit instead of the default joint-and-survivor option, his spouse must sign a notarized written consent form within a specific election window.
⬥
Distribution Event Permanently Recorded on Public Blockchain — Once all required documents are signed, the distribution authorization is anchored to the Hedera public ledger — an immutable, publicly verifiable record. ⬥ Hedera Blockchain
No names. No dollar amounts. No participant data. Just a cryptographic fingerprint.
Proof: SHA-256( local record #908 ) = 9d1f4c7e2b5a3e8f = Hedera sequence 908 message.chain_tail ✓ Tamper-evident. Publicly verifiable. Participant data never leaves your system.
Pending Administrator Review — Distribution Authorization
Retirement Distribution — Chief Robert Harmon (P001)$220,000/yr · Rule of 85 · Married (Joint & Survivor 50% default) · 402(f) notice required · Blockchain record pending
Authorization triggers the 402(f) notice process and queues the Hedera blockchain record. Distribution payments begin after the 30-day waiting period. This action is final and permanently logged.
Live A2A Transaction — Two Agents on Hedera Testnet
TB
TrashBot — Participant Agent
Requesting: Distribution authorization for Chief Robert Harmon (P001)
⬡ Pending Hedera registration…
AY
Andy — Plan Admin Agent
Role: Pension administrator · Millbrook Public Safety Retirement
⬡ Pending Hedera registration…
Full Trust Stack — Live A2A on Hedera Testnet
TrashBot (participant's agent) submits a distribution request. Andy (plan admin agent) processes it through all 16 accountability steps. Each step that touches Hedera links directly to HashScan. Click through at your own pace.
Dept: Police Department · Full-TimeID: P001Request: Retirement Distribution Authorization
58
Age
32
Years of Service
90
Rule of 85
$275,000
Final Salary
Context Integrity Pipeline
Before the AI agent processes any pension request, a four-point integrity record seals exactly what it was given. If a distribution is ever audited, challenged in court, or reviewed by regulators, this receipt proves the agent received the correct, unmodified plan rules — and that nothing changed between retrieval and action.
Watch the pipeline seal Chief Harmon’s case at four checkpoints before the agent acts.