ESOP Recordkeeping Software

[Guest Robert Reynolds]

I am currently looking for recommedations for an in-house recordkeeping software for our existing ESOP. Any information would be appreciated.

[RLL]

Hi Robert Reynolds ---

I recommend that you check with The ESOP Association (at www.esopassociation.org) and the National Center for Employee Ownership (at www.nceo.org).

[Kirk Maldonado]

I wouldn't recommend trying to do that in-house.

When you take into account the cost of the software and the cost of learning about all of the special nuances regarding ESOPs (and having to keep current on all new developments), I don't think it makes economic sense.

In fact, a lot of third party administrators won't touch ESOPs. They feel that unless they do a number of them, it doesn't make sense.

[Guest Robert Reynolds]

Thanks for the advice, but after administering both an ESOP and 401k plans for over 10 years, I am well aware of the nuances an ESOP brings with it. At present, I am more knowledgeable about the needs of an ESOP than our present SW Provider. The recent changes in the law, along with continual errors in the providers software has led me to looking for another provider I can depend upon.

I know ESOPs do not demand the attention of a 401k, so it is harder to find a qualified SW Provider. Using a full service provider greatly increases the cost of administering an ESOP and in any employee owned company, the savings generated by going in house system means less expense and more profit to the bottom line for our owners to share year after year.

[Guest DUKE C]

We are currently using the Schwab (TrustMark) 3T software. This is for traditional. It is an excellent software, but I am not sure if they are going to continue to support it after the end of this year.

Also, I have almost 20 years with ESOP administration. It can still get "hairy" especially if it is a leveraged ESOP. This is why we will no longer handle a leveraged ESOP and look very closely at non-leveraged before accepting this type of plan.

[BeckyMiller]

O.K. First realize that I am totally biased because I work for a firm that does participant accounting for ESOPs.

We have taken over many ESOPs that had been done in-house. I totally appreciate your concern about costs. But, think about the cost of acquiring the software and keeping someone up to date. 10 years of experience puts you way ahead of many ESOP administrators, but think about the value of the second opinion. The opportunity to learn from the ideas generated by a company that handles hundreds of ESOPs, not just yours.

If, that doesn't convince you, here is what I know. Quantech will do share accounting. You have to calculate your collateral release, if leveraged. You will have to separately program in things like forfeiting cash before stock. Quantech will track basis by participant for shares contributed, but you will have to modify for leveraged shares or for the activity of an S corporation.

I believe that Datair has the same limitations, but I have not looked at them for years. There used to be a company out in New Jersey who offered a very slick ESOP program on a unix platform, but I believe that they went out of business about 4 years ago. It also required you to make the technical decisions, it just had the flexibility to handle a lot of different allocation methods.

Not much help - sorry. It is just such a specialized marketplace that the best software has been developed in-house by the major ESOP admin. providers.