Financial Interface/ADP&ACP tests

[pmacduff]

I'd like to know how administrators out there handle clients when using the Financial Interface in Relius with regard to ADP/ACP tests. We have many small clients that we test at June 30 to project to year-end and prevent test failures. When using the financial interface, the data contains a prior year receivable and does not yet have the current last payroll receivable. At this point, we still request census data including deferral/match every six months, but I have to have the client in the database twice, using one for account balance data and one for testing. How do others do this? Is there an easier way? Any input is appreciated.

[Guest Tbrown]

What we have done in the past is 1st - if possible, get the financial institution to report to you on an accrual basis. Some of them do have that data. 2nd - if that doesn't work and you are talking about small plans, I would get the six-month data from the client, enter it, run the test and then take it back out. The second option works if you are only getting data from the financial institution annually. If you are receiving it more often than that, it could get tricky.

Of course you are talking about projections so it typically is not an exact science anyway. We do projections for very few clients. You generally have at least an idea of what they can defer and too often if you are overly concerned with them passing the test, you come up short. That is, they could have contributed more and still passed the test. We have always had alot of success in convincing clients that it is best to go ahead and fail, then do the refunds promptly. There is not change in the taxation and they know that they have put away every penny possible.

Tim

[pmacduff]

Thanks for the reply Tim! I don't know what area of the country you are in, (I'm in the Northeast) but it is funny your point about your client's maximizing and being ok with refunds because they know they have maximized. That makes alot of sense to me.....but we have taken over a number of smaller clients who are annoyed that they have had to to take refunds every single year; they want us to monitor and tell them when to stop so that they don't have to take money back. Also -we do have most of the investment firms give us accrued reports, but it is only at plan year end, not quarterly or semi-annually. I didn't figure that there was an easy out for this dilema, but it was worth a shot, right? Thanks again. Patti

[Guest Tbrown]

I'm in Ohio. It is amazing how responsive the clients have been once it has all been laid out for them. We took a new case on last year where they failed for years and finally they started having their tpa do projections and they would stop deferring. He was so happy that they had not failed that last 2 years until I showed him that he could have put away over $700 more 2 years ago and over $500 more in the prior year. Add that up over his next 10-15 until he retires and it made a big difference. He is now deferring the max and will take a refund in late January or early February.

It sounds like your only way out is to get the data from the client and enter it. I would definitely suggest entering it into your active file, run your allocations and the projected test, then reverse everything and zero your payroll out. I wouldn't create a second plan or a second database just for that. The second plan would be difficult because of the relational database issues. And the second database would just be messy.

Goodluck.