Accrued Fees?

[Guest Jim Pendergrass]

I am processing a plan in which the trustee wants to accrue his fees on a quarterly basis, to be paid on an annual basis, for a plan that is using unit accounting. Does anyone know a way to accrue the fee in Quantech and have it reflected as such in the reports, especially the participant certificate? Quantech support has indicated to me that it is not possible.

[Guest Carol Ringwald]

To my knowledge, this is not possible on Quantech

[Alan Simpson]

I believe that you can accomplish the accruing of fees two different ways, and there may be others.

The first way assumes that you are using the Confirmation Required on your transactions when they are posted to Quantech. You should post the fee so that it is allocated correctly with Confirmation Required selected. At that point the sell trades are created and waiting to be transferred from Buy/Sell to Pending and then to Ordered (Settled). Do not Settle the transactions, just keep them under Buy/Sell until you are ready to take the fee. Please note that the standard reports will not show the "accrued" fee so you will have to print your participant statements using the Custom selection under the Report Writer button in Quantech. Make sure to select that the unconfirmed transactions are included in the statement. Since we utilize custom statements for our plans this has not been a problem. While the participant statements should be correct they will not balance to the standard reports under Quantech. Therefore, you will have to consider this when balancing. When processing future trades remember to print the Trade Report using a date range so that the fee transaction(s) is not included. This method could create a problem if the participant changes their investments during the year or if they are paid out before the fee is taken/paid.

Another option is to set up a generic cash account under the plan and post the fees there. Since the Quantech system does not like an account to go negative you need to fake a contribution into the cash account for each participant. Then post the fee transaction without requiring the confirmation of the trades. You then reverse the fake contribution leaving you with only the fee in that account (which should be negative). When you take the fee, you will have to manually enter transfers from the actual investments on each participant to the "fee account" so that you can sell the shares necessary and zero out the fees. If you select this method you need to set the cash account up under employee deferrals if the fee is to be paid 100% by the employee. Otherwise you can set the fee up under an account that has a vesting schedule. Using this method you should be able to use the standard reports under Quantech.

[This message has been edited by Alan Simpson (edited 04-13-99).]