Opinion about a document providor

[Guest fender5150]

I have a client who needs a new prototype.

Accudraft.com recommended by a collegue. Does anyone have any experience with them? Tech support, quality of documents, etc.

I'm drawn to them because of price, frankly.

Thanks in advance for your input!

[WDIK]

I have found Accudraft's services to be adequate, but not outstanding.

[austin3515]

My professional opinion is that Corbel rocks. I'm sure it's on the high end of the spectrum, but as with most things in life, you get what you pay for...

[commishvp]

We switched from Corbel to Acudraft about a year ago. I do prefer Corbel . . .Acudraft leaves open a lot of room for interpretation on various issues. As we joke in the office it "gives you just enough rope to hang yourself."

[Archimage]

Accudraft is a decent document and their service is decent as well. I do prefer the Accudraft interface over Corbel. I like Corbel's document but I absolutely hate their interface.

Accudraft and others will usually let you demo their document and interface. I suggest you look at a few and see what best fits your needs.

[Peanut Butter Man]

Their document has the best 401k safe harbor language.

[Guest Lawrenceg]

Try Ft William as they are new and now less expensive. Also their Safe Harbor language is such that its application is dependent upon whether or not the notice is provided. So you do not have to take the language out when the plan is no longer safe harbor.

They also have great language for the fail safe provisions and / or average benefits test

[Blinky the 3-eyed Fish]

Also their Safe Harbor language is such that its application is dependent upon whether or not the notice is provided. So you do not have to take the language out when the plan is no longer safe harbor.

IRS no likey. Me not buy.

[austin3515]

But really, are you going to take the advice of a 3 eyed fish that exhibits poor grammar?

[John Feldt ERPA CPC QPA]

If it were me, in this case I would, yes .

[Guest fender5150]

You guys bring up some great points.

I'm interested in 3 things; as many others are I'm sure:

1. Providing a good product. Who's prototype has the best track record? I'm sure how to objectively check on this.

2. Saving time. I want something that makes sense and doesn't have 'bugs' in it. A good tech support staff would be very helpful in this area as well.

3. Providing a competitive product. IE: Saving money. Some tools are expensive. You'd need a high volume of business to defray the cost, which could mean hiring and training employees.

We all know this business is great fun, but I want to make some money also!

I'm giving Accudraft a try. The guy who recommended them has been in the business for 15 years. That doesn't mean he knows what he's doing, necessarily........ But he seems pretty sharp.

Thanks,

Fender

[Jim Chad]

Does anyone know if FT William has an IRS approval letter on a document with this Safe Harbor language?

[Peanut Butter Man]

I don't know if FT William has a letter. Their language sounds the same as the Accudraft language we like. I know Accudraft has a letter on their safe harbor language.

[Guest Lawrenceg]

Does anyone know if FT William has an IRS approval letter on a document with this Safe Harbor language?

Yes they have opinion letters on all their documents. And they currntly charge $1700 a year for up to 250 plans. Its free if you are converting from another service until your old service contract runs out.

I believe Ft William bought out the old PenDocs system and updated it. Not sure though.

[austin3515]

Okay, so I went right to the source: The ERISA Outline Book.

According to Uncle Sal, Blinky is on the money. The IRS has publicly stated at many Q&A sessions that this approach is a no go. However, the book also indicates that many GUST approved documents include this provision, and a favorable letter should insulate any claims by the IRS that this is not allowed. However, he did suggest that this will be eliminated in the EGTTRA restatements. See page 11.471 of the 2006 edition.

[Tom Poje]

its not just Uncle Sal nor the IRS at Q and A sessions.

the preamble to the 401k regs states

(emphasis mine, as well as any abbreviations)

A PLAN that uses the safe harbor method MUST specify whether the safe harbor contribution will be the SHNEC or the SHMAC and is NOT permitted to provide that ADP testing will be used if the requirements for the safe harbor are not satisfied. The safe harbors are intended to provide ees with a minimum threshold in benefits in exchange for easier compliance for the plan sponsor. It would be inconsistent with this approach to providing benefits to allow an employer to deliver smaller benefits to NHCEs and revert to testing.

note, it is the PLAN that decides, not the notice or lack of notice. even in the case of a 'maybe SHNEC' the regs are clear that the PLAN must be amended within 30 days of plan year end.

[austin3515]

So you're opinion is that the preamble to the regs vetoes the GUST opinion letters?

Does anyone have the 2007 EOB? I'm curious to see if he has changed that paragraph, because Sal doesn't mention the preamble to the regs in the 2006 version.

[Guest ellen sungard relius]

Per Relius Consulting, as pointed out, the IRS has made it clear that a plan must specifically include the safe harbor provisions. For most of our GUST documents, the IRS would not permit us to use the notice as the trigger for the safe harbor provisions. We do, however, have one document (the FDP prototype) where the notice is used to trigger the nonelective safe harbor contribution. We have had numerous internal discussions on whether the final 401(k) regulations override any plans that were approved with language that conflicts with the regulations. Our conclusion is that the regulations would override the conflicting provisions. There is no formal or informal guidance from the IRS on this issue, so it's going to be up to each practitioner to decide which position to take.

As far as choosing a document provider, there are many choices out there, but obviously we feel that we offer the best overall service. Sometimes, we can be more expensive than some of the newer companies offering a similar product, but we believe that when you consider all the other products and services we offer, we have the best solution at a fair price.

[John Feldt ERPA CPC QPA]

Some of Sal's comments from The ERISA Outline Book 2007 edition, TRI Pension Services:

on page 11.491, in #6. he indicates now that the GUST period is over, the plan must be written either to reflect that it is ADP-tested or that it is a 401(k) safe harbor plan. If the plan document specifies that the plan is a 401(k)(12) safe harbor plan, and a notice is not given on a timely basis, the employer has failed to operate the plan in accordance with its terms.

on page 11.542, in the footnote, he indicates that in spite of the document requirements expressed by the IRS in the 2004 regulations, many GUST documents were approved by the IRS with more flexible language. For example, some documents allow the employer to decide on an annual basis whether or not to provide the safe harbor notice to participants. The plan provisions are triggered by the safe harbor notice, providing that the absence of the notice triggers the ADP/ACP test. Then he says the 2004 regulations are a signal that the EGTRRA documents ain't gonna get to do it that way and they'll have to conform to the regs (okay, he didn't quite write it that way exactly, but that's the gist of it).

added on edit: So nothing different really from the 2006 EOB here, no mention of the pre-ramble (as Derrin would call it).

[Guest fender5150]

I must admitt I'm not a big fan of an annual Safe Harbor Election. It seems a little inconsistant, and potentially confusing for the employee.

I have a question that is almost rhetorical - IE: There may be no definitive answer: If the IRS has come out against this type of safe harbor provision; what recourse do plans have? Do they just get killed in an audit? Or are they given a grace period to correct thier 'mistake'?

[John Feldt ERPA CPC QPA]

Point to the plan's D-letter and state that this letter should cover your operations at least until the plan is restated for EGTRRA. Ellen's (Sungard's) comment would indicate that such a position may be on thin ice. You never can know until the auditor accepts or rejects your argument, assuming they see the issue at all.

Another way might be to amend the plan or add an addendum or something to fully disclose that the plan really is (or is not) safe harbor, which safe harbor provisions are in place, and then operate accordingly. If doing 3% nonelective "maybe" notices, then you'll amend in and out 30 days before the plan year end for which the 3% safe harbor contribution will be made.

[Peanut Butter Man]

I think the cart is being put before the horse here. It is too soon to tell whether the IRS will permit this language in the EGTRRA documents.

I am curious about something Ellen Sungard Relius said. If the IRS approved this for FT William and Accudraft, why was it approved in only one of Relius' plans? What was different about Relius?

[Guest ellen sungard relius]

When the GUST prototypes were being reviewed by the IRS way back when, everything was dependent upon who your reviewer was. Corbel had a very knowledgeable reviewer, and because we were aware of the rules and the IRS position, we didn't attempt to include this language in our documents knowing full well that it wasn't permitted. We even lobbied through ASPPA to get the IRS to change their position. Also, at the time the plans were submitted to the IRS, FDP was not a part of SunGard.

[Bird]

When the GUST prototypes were being reviewed by the IRS way back when, everything was dependent upon who your reviewer was. Corbel had a very knowledgeable reviewer, and because we were aware of the rules and the IRS position, we didn't attempt to include this language in our documents knowing full well that it wasn't permitted.

The Accudraft language that was finally approved refers to a SH notice AND a written resolution, which is deemed to be an amendment. That's a perfectly acceptable solution, both from my standpoint as a practitioner and the law as I understand it. I don't remember all of the "GUST I" and "GUST II" permutations, and it is possible that some plans were approved with the notice language only, but I am pretty sure anyone who is using an Accudraft document today is getting the notice AND resolution language.

Well, what I just said applies to VS plans. I'm not sure about prototypes so maybe I shouldn't comment, but the "we were too smart" defense doesn't quite fly, IMO.

[Bird]

OK, so I looked it up. The prototype document says the SH notice will be deemed to be an amendment (no resolution requirement). Make of it what you will; it implies to me that the issue was known and resolved in this manner; maybe the IRS reviewer(s) let them slide a bit by not requiring a resolution/actual amendment, but it's not that they were too dumb to catch it, IMO.

I am remembering a little bit more about this and I think some VS documents originally had this language. I recall that we had our plan sponsors sign the notice to lend more weight to it being a deemed amendment.

And BTW I think Sungard is a great company. I just thought this deserved a comment.

[Peanut Butter Man]

We even lobbied through ASPPA to get the IRS to change their position.

Didn't know ASPPA lobbies the IRS on behalf of certain companies. Thanks Ellen Relius Sungard for the lightbulb moment. I wondered how my membership dollars are being spent.

[John Feldt ERPA CPC QPA]

Easy now.

[Mike Preston]

Saying that ASPPA lobies on behalf of individual companies is a silly characterization of what has taken place over the 20 years I've been involved with ASPPA.

Each and every comment is made by somebody who is employed by some firm where that firm has at least one ASPPA member.

A comment is made by a member to those at ASPPA and if the comment bears bringing "political capital" to bear on the issue, as defined by those in charge of these things at ASPPA (the Government Affairs Committee, typically) then resources are mustered and a campaign, either light-handed or heavy-handed is begun.

If the comment was initiated by a firm with significant numbers of ASPPA members (such as Corbel/Sunguard/Relius/whatever) that comment is given no more weight than a comment made by a firm with insignificant numbers of ASPPA members (the sole practitioner). Where the comment comes from is just not relevant. If the issue is real, then ASPPA will gladly take up the good fight.

I've seen it happen. From the inside. To imply otherwise is just not close to reality.

If you don't believe me, volunteer for the Government Affairs Committee or a sub-committee thereof and prove it to yourself.

[Guest amycavanaugh]

I haven't posted on Benefitslink in several years so excuse the length of this post, making up for lost time.

Recently, I have been providing independent document consulting services to various segments of the industry ranging from mutual fund companies to very small firms. Someone asked me to take a look at this document/safe harbor thread because we were discussing the exact topic just the other day and they felt it conflicted with what I had told them.

Based on what I am reading here, the exact manner that the AccuDraft safe harbor notice/resolution combination works is grossly misunderstood.

Recently, I was working on a project where a firm wanted me to "fix" the AccuDraft safe harbor language so it would be "legal" and there was nothing to fix. The AccuDraft safe harbor approach relies on the ability to amend a plan via a corporate resolution. It is the resolution, not the notice that drives the plan's safe harbor status from year to year.

When industry gurus such as Tom Poje are asked about a rule on the fly without looking at the details of the plan's terms it is impossible for them to give an informed response-they are answering a question in a vacuum. So while the answer to their question may be correct, it is then taken out of context and applied to a very specific situation. If Tom or Sal or the IRS or Corbel or anyone had the time (they don't) to walk through the AccuDraft safe harbor provisions, they would see that it holds (and held) water before and after the 401(k) regulations. I also know that AccuDraft retained this approach in their EGTRRA document because (1) their clients asked them too and (2) because it works (if used properly) and I also know that the ability to use this provision was not because the AccuDraft document received some sort of substandard level of review at the IRS as was implied in one of the responses (there are checks and balances to prevent that).

Contrary to what seems to be implied in some of these posting, the clarification in the final 401(k) regulations was not the "AccuDraft clause". I also would reiterate what Mike Preston said that to imply that ASPPA is going to expend its valuable political clout rallying for personal agendas is a gross discredit to the tremendous impact ASPPA has had over the legislative and regulatory process in recent years.

If the terms of the AccuDraft are properly followed:

1) The plan sponsor executes a resolution declaring the safe harbor status and the contributions and

2) A timely notice is distributed; the plan is in compliance with the regulations.

I noticed that one commenter stated that the AccuDraft document gives a practitioner enough rope to hang themselves. I would agree that the AccuDraft document is "intentionally vague" in several key areas, however it was their intent to rely upon the document only with respect to key qualification issues relying upon outside administrative policies for matters that are operational and administrative.

The flip side of vague is a document that drills in so deep on a topic, the chances are likely that there will be an operational violation for failing to meet the specific terms of the document; more rope just a different type.

That said, over the past year I have been exposed to a vast array of documents and document providers and my overall comment is that that they all have pluses and minuses (which I will be happy to freely share but not in a public forum).

I do not have a personal favorite to recommend because which document works best for a firm depends on what type of plans that a firm prepares, what administrative software is used, as well as pricing, design features, format and the operating system itself. As far as selecting a document, I would suggest the following:

Take a look at your clientbase, find your most complex plan and the plan's that caused the biggest administrative headaches and see how those plans would have worked had you been on a different provider. If you go to each of the document provider's websites you can gain a good deal of insight into the different documents and the manner in which they are delivered. It is not a matter of you get what you pay for it is a matter of knowing what your document needs are going to be, knowing what your obstacles are going to be and then making an informed decision when determining if the document provider you select will help you overcome those obstacles or create new ones. There are also firms that are now using more than one document provider-that is one for db plans, one for dc plans one for amendments. This works well in some instances again because each of the providers has some areas where they excel.

I have also noticed lately, that there is a much more cooperative effort between the document providers to service the industry collectively. This can only help the industry as we embark on the painful process of restating for EGTRRA and preparing annual amendments, notices and disclosures.

[austin3515]

Deleted comments on fees (see next post)

Just so people appreciate Amy's advice:

-Within the Davis Bacon definition of the ERISA Outline Book, Amy is credited as the primary source of the content (examples, etc.) via an article she wrote for the ASPPA Journal (May/June 2003) which I myself read based on that recommendation (I highly recommend it if you administer any such plans).

-She's one of the experts at TagData

-She authored of the Coverage and Nondiscrimation Answer Book (with, of course, Tom Poje).

-She works at McKay Hochman, frequent poster, of very informative Q&A's on the benefitslink newsletter.

I can't remember a post that had this many heavy hitters! Maybe Paul Schultze will weigh in?

[Mike Preston]

Much as we like to communicate openly and freely, I want to caution people that this is a public website. Not only can the government monitor postings here, but they invariably will do so. Especially when the issue of fees is discussed. Please do not suggest specific levels of fees for specific services. There are many governmental rules against discussions of that sort.

I don't know where the line is drawn, technically. That means that should it even appear to have been crossed, BenefitsLink will have no choice but to delete the discussion.

[austin3515]

Yikes, I'll edit my post

[John Feldt ERPA CPC QPA]

Man, I missed the good stuff over the weekend before the edits.

fender, if you look at Austin's link and Mike Preston's comments, you'll see that we are not to discuss actual fees. However, I think a discussion of how we package our fees is probably okay (without disclosing any real amounts).

Internally, we have been tossing around the idea for almost 2 years of how to better package our amendments and restatement fees. We are soon to offer clients the option of paying a "small" annual or quarterly amount to cover all IRS-required amendments. An additional option will likely be an option to pay an annual or quarterly amount that covers the next restatement as well (we're still working on those details).

For example, you know the restatements are supposed to be like clockwork every 6 years for most plans, so you could take the risk to set your price now for the next restatement. Suppose you decide to charge $120 for the EGTRRA restatement (obviously, this amount is for illustration purposes only). Then the client could choose to pay you $120 / 6 = $20 per year or $5 per quarter - a small easy to handle fee. Psychologically easier to swallow for some. Easier for budgeting for others. Steadier cash flow for the receiver. All good so far!

Or the client could opt for both the amendment package and the restatement package - perhaps a discount would be included . . . still working through that.

Thanks Mike for directing me here!

edited for the letter "i"

[Bob R]

Thought I'd chime in...

1) Charging an annual doc maintenance fee makes sense these days since interim amendments will continue to be required.

2) I agree with Mike's comments regarding ASPPA - it is a group of individuals and the issues relating to the safe harbor amendment weren't to further the goals of any specific company. As evidenced by this thread, the requirement that a safe harbor plan be specific is obviously something no one wants (other than the IRS).

3) Ellen's comment doesn't appear to be aimed at any specific provider - rather it seems (to me) to be a general response as to "why" documents may vary on what are considered qualification issues where there should be no flexibility. The prior posts seemed to imply that Accudraft had an impermissible provision, and as pointed out by Amy that was an incorrect statement. But, as far as Ellen's comment regarding the review of the plans, inconsistency in the review process is one of the issues the IRS always struggles with. It's not a matter of a good review/bad reviewer. Rather, the reviewers are human and may not catch all of the nuances. It's what happens when the IRS restricts the ability to incorporate the code and regs by reference - attempting to rewrite the regulations to put them into a plan is just begging for errors and/or inconsistencies.

4) As Amy pointed out, the Accudraft doc doesn't have an impermissible provision. There are no prescribed rules on how an amendment must be structured - combining a resolution with an amendment would seem to be acceptable and not in violation of the regs. The resolution would still need to spcificy the safe harbor contribution, etc. (it's just the amendment combined with a resolution in a single document). It would be interesting to see what others have approved in their plans.

[Guest fender5150]

I originally posted this question to get some opinions about a service that was recommended by a local TPA. I got that and more. Thank you! Accudraft's prototype has survived a great deal of scrutenty, which is a testiment to them.

I went with Accudraft, based on the first 10 responses of this thread. They have been great so far, though I know we're still in the honeymoon phase. By using Accudraft and my testing site (401ktest.com) I'm hopeful that I can deliver a quality product. We'll see! : )