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Which plan-documents provider?


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If, instead of using a law firm, an employer wants to make an employee stock ownership plan by using the assembly engine of FIS (Sungard) Relius, Wolters Kluwer ftwilliam, or another documents provider, which would you choose?

Which has the most flexibility in choices of plan provisions?

If the user lacks expert knowledge of ESOPs, which has a questionnaire or input system with the best help in discerning what the employer wants?

Which provider's documents are easiest for an employer or its TPA to understand?

What other factors should I consider in helping a friend select a plan-documents provider?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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If the user lacks expert knowledge of ESOPs, which has a questionnaire or input system with the best help in discerning what the employer wants?

If the user lacks expert knowledge of ESOPs, it should probably be passed on to a user who DOES have said knowledge :)

All kidding aside, this type of question always makes me a bit uneasy. If you don't understand the mechanics behind the questionnaire/input system, you probably shouldn't use it to create a plan.

 

 

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I agree with RatherBeGolfing's observation. But, leaving aside ESOP features, how many hundreds of thousands of retirement plans were created using document-assembly engines with the employer answering questions and marking selection boxes with little or no guidance from knowledgeable practitioners?

And let me ask the second of my four questions a different way: If a user had hand-holding from someone like a BenefitsLink maven, which plan-documents system offers the best help in explaining (at least to the knowledgeable person) the available choices?

If it matters, the user wants to establish an S corporation ESOP.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Anyone who wants to do an ESOP on the extreme cheap has conclusively demonstrated that the decision to have an ESOP is a bad decision. ESOPS are such trouble that the high price tag is a screen against misuse. If you cannot accept the idea of a high price and engagement of competent advisers and service providers, then you are taking serious risk going forward with an ESOP, and not just legal risk.

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We're preaching among the choir. I had already furnished to my friend a referral list of ESOP-specialist lawyers for her to suggest to the business founder. After the business founder rejected the idea of using any lawyer, my friend asked about service substitutes. But you've persuaded me I should advise my friend to extricate herself from the situation.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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I asked the ERISA attorney most of our ESOP clients use about how much the coming pre-approved ESOP documents will affect his practice. He replied that there is more than enough work for ESOPs other than the plan document to keep him busy. The last ESOP he helped install for a client involved three owners moving to a leveraged 100% ESOP-owned S-Corp. There were nearly 20 legal documents he prepared in addition to the plan document. I don't see how you can properly start an ESOP without a competent ERISA attorney, even if you are going to use a pre-approved document.

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  • 5 months later...

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