Compiling accurate ESOP census data is critical to the plan.
The underlying census data drives eligibility, vesting, and various allocations of the plan assets. We have compiled a few helpful hints to improve accuracy of the data:-
Designate a responsible person to lead the project.
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Kickoff the process with a team meeting, include human resources, payroll and IT personnel and develop a timeline and assign responsibilities.
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Discuss with the third-party administrator any changes in their requirements for submitting data.
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Review the plan document definition for eligible compensation and any amendments for the plan year which you are reporting.
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Review payroll codes for proper inclusion in the definition of compensation. To the extent new payroll codes were added, review the document to determine if they are a component of eligible compensation. Consult with outside legal if needed.
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When accumulating payroll data, be sure to agree to year end payroll reports for compensation and number of employees.
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If the company made an acquisition during the plan year, be sure to review the document for eligibility of those potential new participants.
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To the extent a company sold a portion of their business, ensure those individuals were properly removed from the census. Also, verify with outside counsel whether or not a partial termination of the plan was evaluated at the time of the sale.
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Prepare a comparison of the prior year census file to current year census file for reasonableness.
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Review a sample of new hires, existing employees and terminations as an added step to ensure underlying detail is accurate.
Keep these tips in mind as you accumulate your year end data as well as the documentation supporting your work.
If you have questions, please reach out to us. We will connect you with one of our professionals who can advise you.
