Takeover loans and vesting

[Spencer]

I have a takeover plan with loans. The reports from the prior admin show all loans as 100% vested. Relius applies vesting to loans. The client wants loans to continue to be reflected as they have been (100% vesting).

Anyone know how I can override vesting for loans to show them as 100% vested? :confused:

Thanks!

[Tom Poje]

you did not indicate which report you want the loans to show as 100%.

for instance, on the summary of accounts I had to modify the crystal report so that the vested balance that prints is

"if {RPTPLANACCT.ACCTNAM}='Loan' then Sum ({RPTEEACCT.ENDBALAMT}, {@AccountGroup})

else Sum ({RPTEEACCT.VESTBALAMT}, {@AccountGroup})"

Basically, this statement is saying that if the account is named loan, instead of printing the vested balance, print the end balance (e.g. since vest bal = end bal you are at 100%)

otherwise, print the vested balance.

so it is really a matter of modifying the report you are using. (On the other hand, if the loan is taking from vested $, then the account from where the loan was taken is going to show the wrong vesteing. think about it. Suppose you had $10,000 in a 20% vested account. your vested balance is 2000. now suppose you took a $2000 loan.

you would want to have loan account = 2000, vested 2000

other account 8000, 20% vested, but vested balance = 0 since you are already showing it vested elsewhere.

ugh. no wonder you should only allow or take loans from fully vested accounts. it is just begging for headaches.

[pmacduff]

We've had some loan discussion before because I always wanted to show my loans as 100% vested, too since you cannot usually borrow unvested $. Relius Support told me to change my loan account in the Plan Specifications to another source (ie., QNEC) and then go into a census DER and override the vesting to 100%. If I can, I use a source not currently being used in the plan. The only problem you find is that the account activity pages will show that source for the loans (ie., I just did one using a 100% vested employer source and the loans are listed on the acitivity page as Employer Discretionary source.) This is ok with this particular client, so I've done that. Hope this helps some!

[Guest DottleC2]

You could create a Fund called Loan, or Account.

Then you can create an account called Loan (or called anything).

Use immediate vesting for that account. (Source would be determined by the loan).

Apply loan payments as transfers from Loan to investment, loan interest as gain, new loans as transfers from Investment/Cash to Loan.

(May require computer share privaleges etc. to add funds if your system is set up as such. Overall policy sometimes prevents this type of flexibility.)

[Spencer]

I have 61 loans in this plan so I'd rather not use some sort of workaround. I think I'm going to attempt modifying the crystal reports as Tom suggested.

thanks for all input though!

[Guest DottleC2]

Yes, you're probably right. It seems that you should be able to switch to a secondary vesting schedule for the loan source, at the participant level. How does Relius choose which vesting schedule to apply I wonder? Oh well, it's always something.

Bill

[pmacduff]

Hi everyone - I'm back to those cursed loans on the reports! Tom - I tried your "If/Then, Else" statement on this thread. (My plan has deferral,match, rollover & loan accounts; everything is 100% vested. This client transferred 100% from one funding provider to another during this quarter I am valuing. When I use the If/Then... formula, the report shows the correct vested balance for the deferral/match/rollover accounts for the new fund, but it also shows the actual ending vested amount for the deferral & match funds under the old funding provider (which has a "0" ending balance). Any ideas? I assume I have to add to the statement, but I'm not sure how. I thought the {@AccountGroup} would've taken care of the fact that the funds changed. Thanks in advance. Patti

[Tom Poje]

oh sure, just when I was deciding whether to 'release' my version of a top heavy report (Well, I had one plan that I took from Relius 40 page top heavy report down to 10 pages so there is a reason for creating such a report! I think as long as there are no prior in service distributions I am ok)

Anyway, as to your issue.

My brain is on permanent freeze, I think.

If it was just a couple of problem children, I would probably try the following:

set up a DER for prior distribution. Enter the 'vested balance' value that you want to get rid of (as a negative)

or actually see if there is a value sitting there.

If I recall correctly to determine the vested balance in an account, the system takes the end balance plus any prior distributions. It multiplies this by the vested % and then subtracts off the distributions. That way, if a participant has received a partial distribution you achieve a correct vested balance

e.g. end bal = 1000, ee also had a distrib of 200 for whatever reason. ee is 40% vested.

so 1000 + 200 = 1200, 40% 0f 1200 = 480. ee has already received 200, so the vested balance will show as 280. That will look real bizarre. end bal = 1000, 40% vested, vested bal = 280. Now try explaining that, but it does make sense.

Maybe the sytem also takes forfeitures into consideration, if somehow they got buried into it. And if you did things through a takeover transaction, nothing would surprise me.

Anyway, hope that helps!

[FAPInJax]

I have a couple of questions:

Employee has the following balances:

Employer $1000 which is 60% vested.

Now, the employee takes a loan for $600.

Changing the vested balance on reports seems to create the following:

Employer $400 which is still 60% vested

Loan $600 which is 100% vested

This causes the employee to see an immediate gain in their vested balance by taking a loan of $240 (actual vested balance of $600 but the report will show $840)?????

Of course this method does work IF the vesting is 100% in the source from which the money was taken.

Next question:

The employee does a marvelous job of investing their remaining money and promptly loses $300.

Employer $100

Loan $600

Now, the vested balance is $420 ($700 total with 60% vesting applied).

How can the employee still have a 100% vested interest in $600 (forgetting about employer money for the moment)??

Tom is absolutely right when he commented about only taking loans from fully vested funds!!