Accrual Year-End Report Required?

[Guest North Meets South]

This may seem like a silly question, but we have a differing opinion here in our office. If a DC plan is on a Hancock (example) platform, where part's get statements and instant access to their accounts; our firm is calculating er contributions (annually or quarterly, as case may be); are we to also provide a year end accrual-based report?? I have several new clients that fit this description, and some in our office wish to prepare this report (thus combining the at-market value PLUS accruals), and some say they have access to cash-basis reporting all the time, why should we charge the client more? We do all the testing and calculating of contributions.

Thanks!!

[Bird]

What kind of "report" are we talking about?

In our office, we prepare an annual, accrual-based full valuation report, with an account balance statement, financial statements, and tax return all in one place. I think that's the way it should be done, to tie everything together. In my experience, if you don't do this, a lot of stuff gets missed, no matter how well you think you are handling it on a daily basis. But I've seen plenty of TPAs (especially if we use that term loosely to include the ADPs and Paychex of the world) who just spew out whatever their computer generates and throw it at the client at random times.

If you are talking about participant statements, then generally no, we're not going to prepare an additional statement, as long as the investment company includes vesting. If they don't, then PPA requires you to provide a statement with vesting or a separate statement describing vesting, and since we run everything through our system, it's often easiest to just spit out accrual-based statements. (Of course that probably confuses some participants into thinking they have twice what they really have, but that's another matter.)

[Guest North Meets South]

Thank you, Bird.

Your last sentence says it all... we try to avoid participant confusion.

Thanks!!

[Guest Jennyb473]

we are a true TPA, we issue quarterly statements to our daily plans (plans are at trust company in omnibus accounts), so we show vesting per quarter, etc. We do prepare annual statements with the accruals on them as well, but not at year end. We prepare them with the tax return, as Bird indicated, because we have to run them along with our other reports for full year reporting on the 5500 anyway. We send them out to the client along with a few other full year reports, the SAR and their 5500. Of course, this is often confusing to participants since they are receiving a 12/31 ytd statement in July after they have already received a 3/31 & 6/30 statement for the next year. We get an influx of distribution requests after this most years too because people see a statement and don't look at the dates on it and assume they have more money again. I guess we know what assuming does........

[K2retire]

I currently work in a daily environment where quarterly statements are issued on a cash basis by the mutual fund company. We do not issue a year end statement showing accrued contributions. Based on the conversations I've had with participants (both here and in balance forward settings) they tend to be confused by accrued numbers.

The vesting figures on the quarterly statements are based on hours entered by the client. Some clients update that information every time they make a deposit, others wait until they fund their year end employer contribution months later. That is a more troublesome issue, since participants expect to see their vesting updated as soon as they work their 1001st hour for the year.