SESSION TITLE. Fall ESOP Forum Agenda. Plan Administration Cycle

Transcription

1 Administrative Timeline Presented by: Renee Stadtmueller Blue Ridge ESOP Associates 154 Hansen Road Charlottesville, VA (434) Agenda Introduction Objectives Outline the key requirements and deadlines to keep your ESOP on track Cover the issues month by month using a sample administration timeline for an ESOP with a December plan year end Provide the framework of an annual review process to help satisfy your fiduciary obligations as Plan Administrator and/or Plan Trustee Discuss best practices for using and managing timelines Questions ask anytime 2 Plan Administration Cycle Planning Data gathering Eligibility determination Allocations to participant accounts Determine account balances, vested benefits Run discrimination tests Plan summary and participant statements Form 5500, other regulatory filings Distribution/diversification processing 3 1

2 Pre-planning December Perform due diligence on your team of ESOP advisors Engage ESOP advisors as needed Year End Data Request from TPA Process Required Minimums Distributions (RMDs) 4 Pre-planning December Pre-allocation meeting with your Third Party Administrator (TPA) Review of the prior year administration process Discuss any amendments that took place during the plan year Will the ESOP need a plan audit for the plan year? Current year administration timeline Preparation of the employee census data file for the plan year Delivery of bank statements and employer contribution Receipt of the final stock value 5 January Distribute Preliminary ESOP Diversification Forms Complete Annual Information and Questionnaire Forms Prepare benefit payment government filings IRS Form 1099-R IRS Form 1096 IRS Form 945 Notify new participants Distribute Summary Plan Description (SPD) and Summary of Material Modification(s) (SMM) to new participants (within 90 days of eligibility) Organize census information 6 2

3 Census Tips Check plan rules for reporting hours Actual Hours Equivalency Method Check dates of termination Identify rehires Identify those as not eligible to participate Identify family members of shareholders or key employees Double check your Plan s definition of compensation! 7 Census Tips Do a 2 nd check of the census file to ensure its completeness; tie totals to W3 or payroll reports Report death/disability/retirement terminations Check your next month (January) payroll files for employees with no compensation to verify if they were reported as terminated in the prior year Report those on military leave or who have returned from leave; they may be due a make up contribution 8 February Census data review by TPA Determine eligibility Perform preliminary compliance testing Compensation Limit Determination Elective Deferral Limit Deduction Test Restricted Participant Determination Anti-Abuse Test (S Corp only) Coverage Test Gather ESOP trust activity for the Plan Year Draft preliminary ESOP trust accounting reports 9 3

4 Trust Reporting Tips Identify contributions, dividends, and any amounts accrued at plan year end Identify distributions, stock distributions, corporate redemptions, stock splits or other stock activity CFO should confirm contribution and dividend amounts Provide appraiser with correct shareholder data 10 March Complete company financial statements for prior year Provide financial statements to Valuation Firm(Appraiser) Corporate tax return due date if not extended March 15th Draft preliminary Allocation Report on a participant level Eligible participants should return Preliminary Diversification Forms (within 90 days after the plan year end) Distribute RMDs for participants who first met requirements during calendar year due by April 1st 11 April Appraiser conducts on-site due diligence and/or management interviews Appraiser delivers draft Appraisal Report to the Trustee(s) Trustee meets with Appraiser to review draft Appraisal Report 12 4

5 May Appraiser provides final Valuation Report to the Trustee(s) Trustee determines stock value and forwards copies to Accounting firm and TPA Accounting firm releases final financial statements Issue final ESOP administration reports and compliance testing reports Reconfirm ESOP plan audit dates (if applicable) Post allocation meeting with TPA 13 May Conduct employee meetings Deliver participant statements Determine distribution and diversification eligibility amounts Deliver distribution and diversification packages to eligible participants 14 Distribution Considerations Distribution Paperwork (Timing, Form, Method) Diversification Paperwork (Distribution vs. Transfer) Special Notice of Tax Treatment Distribution Communications/Distribution Window Pay Distributions, Withholding, Expenses Required Minimum Distributions 15 5

6 June Distribution and diversification election windows close Election forms are reviewed and Advice to Trustee Report is prepared Diversification election amounts are processed (within 90 days following election period or 180 days after the plan year end) Distribution elections are processed Accounting firm completes ESOP plan audit 16 July File IRS Form 5500, IRS Form 8955-SSA, appropriate schedules, and audit report (if needed) by July 31st if not extended Due date for delivery of participant statement is the same as the due date for the IRS Form 8955-SSA - July 31st if not extended Deliver updated SPD or SMM to participants within 210 days after the close of the plan year in which adopted (with an update at least every 5 years) 17 August Take a break from the ESOP administration cycle you deserve it! 18 6

7 September Corporate tax return due date if extended September 15th Prior year accrued contributions must be deposited in the ESOP Trust by corporate tax return filing If contributions are made in stock, Board must authorize inkind contribution and stock certificates must be issued Deliver Summary Annual Report (SAR) to ESOP participants September 30th if the IRS Form 5500 was not extended (SAR is due no later than 9 months after the close of the plan year or 2 months after the extended due date of the IRS Form 5500) 19 October Perform preliminary 409(p) compliance testing for S Corporations Projected contributions Projected share release Perform ESOP repurchase obligation forecasting and planning Revisit distribution policy File IRS Form 5500, IRS Form 8955-SSA, appropriate schedules, and audit report (if needed) by October 15th if filing was extended 20 November Contact ESOP counsel to: Draft any ESOP amendments needed Prepare documents for current year ESOP transactions New ESOP stock purchase from outside shareholders Re-leveraging former redeemed shares Re-evaluate Timeline & organize files 21 7

8 Questions? Renee Stadtmueller Blue Ridge ESOP Associates 154 Hansen Road Charlottesville, VA (434)