The ohio employee ownership center april 20 2007 basic relationship between the company and the tpa
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The Ohio Employee Ownership Center April 20, 2007 Basic Relationship Between the Company and the TPA. Florence V. Zabarsky Zabarsky & Associates, LLC (440) 572-4950 [email protected]

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The ohio employee ownership center april 20 2007 basic relationship between the company and the tpa

The Ohio Employee Ownership Center April 20, 2007Basic Relationship Between the Company and the TPA

Florence V. Zabarsky

Zabarsky & Associates, LLC

(440) 572-4950

[email protected]


  • A good relationship between the Company and the TPA is crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • The TPA should be knowledgeable, but also personable and able to provide efficient service

  • The Company, or Plan Sponsor should be available to work with the TPA as needed to respond to any issues that arise


Basic relationship between the company and the tpa
Basic Relationship Between the Company and the TPA crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Service Agreement contents

  • Annual Data Request

  • Partnership between the TPA, Client and Trust Company

  • Preliminary Report

  • Communication of testing results and issues

  • Other TPA Functions


Service agreement contents
Service Agreement Contents crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • A service agreement should be in place for each Client/TPA relationship

  • It should include a Schedule of Services, along with responsible party

  • Avoid functions that no one realizes they are responsible for


Service agreement contents1
Service Agreement Contents crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

Routine TPA Duties:

  • Eligibility determination

  • Participant recordkeeping

  • Calculation/allocation of employer contribution

  • Calculation/allocation of forfeitures

  • Distribution processing

  • Compliance testing


Service agreement contents2
Service Agreement Contents crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

Duties Rarely Handled By TPA:

  • Making any decisions related to the Plan

    • To avoid being considered a fiduciary, the TPA cannot make any decisions in regard to the Plan. This would include method of handling any process that a Plan would have a choice in

      • Could include areas of the Plan Documents, testing, etc.

  • TPAs normally do not issue Plan disbursements


Annual data request
Annual Data Request crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Employee (Census) Information

  • Company Information

  • ESOP Information


Annual data request1
Annual Data Request crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

Employee (Census) Information

  • SSN, Name

  • Dates

    • Birth

    • Hire

    • Termination

    • Rehire history

  • Hours

  • Compensation


Annual data request2
Annual Data Request crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

Employee (Census) Information

  • Any “other” contributions – 401(k), match, employer to another plan

  • Officers

  • Shareholders

  • Family Members

  • Pending QDROs


Company Information crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Type of Company – C Corp, S Corp, etc.

  • Any mergers, acquisitions, etc.


Annual data request3
Annual Data Request crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

ESOP Information

  • Plan Assets – including Checking/Trust accounts, any mutual funds, any other investments

  • Detail of ESOP loan payments made

  • Amendments to Plan Document or Loan Document

  • Plan Year-end Stock Valuation

  • Fidelity bond information


Working with Client and Trust Company crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

During the year-end allocation process it is important to have a representative available at both the client and the Trust Company, for any issues or questions that arise


Preliminary Report crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Contents

  • Discussion in regard to


Communicating testing results and issues crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Options and timing

  • Section 404 – Deductibility

  • Section 410b - Coverage

  • Section 415 – Annual Additions

  • Section 416 – Top Heavy


Final Report and Participant Statements crucial to the effective and smooth operation of an ESOP, or any Retirement Plan


Other TPA Functions crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • Notification to Client of distributions

  • R.M.D.s

  • Diversification

    • Participants Eligible for Notification

    • Calculation of available amount

  • Annual Plan Sponsor Meeting

  • Employee Meetings


Sample Timeline crucial to the effective and smooth operation of an ESOP, or any Retirement Plan

  • December 1  TPA sends a year-end data request to the Company

    • This should include an employee census request, as well as detail of all items needed

  • February 15  Company should remit all requested items to the TPA

  • March 15  TPA Delivers preliminary report to the client

  • March 31  Appraiser completes year-end stock valuation

  • March 31  Company reviews/gives approval of preliminary report

  • April 15 -30  TPA delivers completed final report, participant statements, final testing and Form 5500 (if unaudited Plan) to client


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