cash basis & contribution allocation

[Guest Stacey L Miller]

posted 07-20-99 20:00 ET (US)        

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I use Quantech and am moving to cash basis statements (eventually to daily val) but am uncertain how to handle discretionary contribution receivables. On the one hand, I need to allocate the contribution based on compensation from one year. On the other hand, with cash basis statements, it seems like I don't want the contribution to show up until it is deposited, usually in the following year. I can't visualize how to accomplish the allocation based on one year's data yet not have it show up until the next year's participant statements.

I'd appreciate insights from those of you who are doing cash basis statements.

[Guest Tom Makeever]

Stacey:

Enter your discretionary ER contribution transaction as of the year end (i.e. 12/31/98) with Confirmation Required checked "on". Post the transaction. This will post the transaction and will include the contribution amount for testing purposes, but with Confirmation Required enabled, it won't allocate any amounts to the participants until the transaction is settled.

Next, make sure you've set your reporting basis as Trade Date (cash reporting) for the plan(s) in question in Plan Specs/Miscellaneous. Once the actual deposit of funds for the contribution is made, "settle" the transaction/trade by selecting Activity/Trades in the Transaction Entry screen. You'll see a pending trade for your contribution. Highlight it, select Order, click on the Pending tab, highlight the trade and select Settle. You'll get a dialog box to enter the settlement date, price, and units. Once you enter the data and click on OK, the system will allocate the dollars/units to the appropriate participants.

Assuming the trade/settlement date is 3/15/99, using cash reporting, contribution won't show up until you run reports that have an end date equal to or later than 3/15/99. Additionally, if you view the contribution at the participant level you'll see an effective date of 12/31/98 and a trade date of 3/15/99. The later date is always used in cash reporting.

You've now essentially processed a "daily" trade. Quantech Support can provide additional help if needed. Good Luck!

[Guest Sue Michalski]

I add a er receivable account and post my contribution there.Then update account balances. When the contribution is funded, add a transfer transaction and radio button " transfer receivable" which then puts the contribution into ppt accounts by source.

[Guest MMBA]

Regarding cash basis statements - do you know of a way to produce the year end statements (daily vals) without knowing what the ERC will be? Can you complete transactions for the next year but still be able to complete the required testing for the previous year? Would the ERC be shown as a prior year contribution and labeled as such on future statements?

[Alan Simpson]

I too have established a ER receivable account under Quantech to hold the ER contribution receivable. The reason for this is that I can post it as a receivable, but not have Quantech actually determine the appropriate buys since the receivable is tracked as a cash account.

Therefore, during the next year when the receivable is contributed I then use the transfer receivables as mentioned above and the system will inform me of the appropriate mutual funds to buy.

Doing it this way, instead of posting the receivable but not confirming the transactions, ensures that any participants who make a change in their investments will have the correct investments purchased, instead of the investment allocations they had at the end of the year.