Our client-oriented services provide all of the services needed to manage your ESOP recordkeeping and compliance requirements in a timely and efficient manner with minimum involvement of your HR staff.
The Menke Group is a full-service third party administrator that administers more ESOPs than any other firm in the country. The goal of our highly experienced administrators is to provide all of the services needed to administer your ESOP so that your HR staff does not need to spend valuable time on this matter.
Among the services that we provide are the following:
Participant Processing and Recordkeeping
- We maintain historical records of each employee, including hire dates, rehire dates, dates of birth, plan entry dates, eligible compensation, hours of service and leaves of absences.
- Each year we determine which employees meet the eligibility requirements to enter the Plan and which employees are eligible to receive an allocation, based upon your individual Plan provisions.
- We track each employee’s years of service, years of participation and vesting.
Allocations of Contributions and Forfeitures & Recordkeeping of Participant Accounts
- We allocate all company contributions, all forfeitures and all trust earnings to individual participant accounts in accordance with your Plan provisions.
- We allocate C corporation dividend payments and S corporation dividend distributions in accordance with your Plan provisions, depending upon whether the Plan is leveraged or unleveraged.
- We allocate shares that have been distributed and repurchased by the Plan and shares that have been “rebalanced” in accordance with your Plan provisions.
- In the case of leveraged ESOPs, we calculate the shares released from the suspense account in accordance with the requirements of the “general rule” or the “special rule”, as specified in your ESOP pledge agreement.
- We track the cost basis and share price history of shares of company stock acquired by the Plan, of shares of company stock that are reallocated as forfeitures, and of shares of company stock that are distributed and repurchased by the Plan.
- We maintain and track participant accounts for shares that must be separately tracked due to the requirements of IRC Section 1042 or IRC Section 409(p).
- We prepare annual individual benefit statements that reflect the account balances, the changes in the accounts, and the vested percentages of each participant.
- We calculate the maximum contribution amount to determine that the company contribution is not in excess of the contribution limitation under IRC Section 404.
- We calculate the maximum allocation limitation for each participant to assure that the allocations to each of the participants do not exceed the maximum limit under IRC Section 415.
- We perform nondiscrimination testing under Code Section 401(a)(4) and top-heavy testing under IRC Section 416.
- We test for compliance with the minimum coverage requirements of IRC Section 410(b).
- We test for compliance with IRC Section 409(n) with respect to the allocation restrictions that apply when a selling shareholder elects non-recognition of capital gain on the sale of company stock to the ESOP under IRC Section 1042.
- We test for compliance with IRC Section 409(p) to make sure that stock allocations do not result in a “non-allocation” year in the case of an ESOP that is sponsored by an S corporation.
- We test employee termination rates to determine if there has been a partial Plan termination that requires full vesting of terminated participants’ accounts.
- We prepare signature-ready Annual Return/Report Form 5500 and related schedules for filing with the IRS. In the case of larger plans that require a Plan audit, we work directly with your auditors to ensure that they have all the necessary information to complete their audit.
- We work with your trustees and/or your internal ESOP point-person to prepare and reconcile Trust statements of receipts and disbursements and of assets and liabilities, ready for participant signatures.
- We work with your trustees and/or your internal ESOP point-person to review and reconcile all Trust transaction, including leveraged purchases of shares of company stock, leveraged ESOP share release calculations and Plan distributions and repurchases of shares of company stock.
Processing of Plan Distributions
- We prepare participant distribution forms for termination distributions, diversification distributions, in-service distributions, and required minimum distributions that are custom-tailored to the provisions of your Plan document, ready for participant signatures.
- We prepare IRS Form 1099-R for all participants who have received distributions from your ESOP and file such forms electronically with the IRS.
- We prepare IRS Form 1099-DIV for participants who have received a pass-through dividend from your ESOP and file such forms electronically with the IRS.
- We provide expert advice and assistance should you need to consider changes in your distribution policies in order to spread out your repurchase obligations or to provide more company stock for allocation to new hires.
Optional Outsourcing Services
For those companies who wish to further free up their HR staffs from all time-consuming administrative duties regarding the management of their ESOPs, the Menke Group can provide and/or assist in outsourcing the following services:
Payment of Plan Distributions
In addition to preparing signature-ready participant distribution forms for termination distributions, diversification distributions, in-service distributions and required minimum distributions, we will send and receive all such documents to and from appropriate participants. Upon receipt of the necessary documentation from participants, we will then prepare checks for review, signature and mailing by the ESOP committee to those participants who have elected either to receive their distribution or to roll over their distribution to an IRA or to another qualified plan.
Distribution of 1099-R Forms
In addition to preparing IRS Form 1099-R for all participants who have received distributions from your ESOP, and in addition to filing such forms electronically with the IRS, we will mail the individual forms to the respective participants.
Distribution of 1099-DIV Forms
In addition to preparing IRS Form 1099-DIV for all participants who have received pass-through dividends from your ESOP, and in addition to filing such forms electronically with the IRS, we will mail the individual forms to the respective participants.
Maintenance of Beneficiary Designation Forms
The beneficiary designation forms will be available online for completion by participants or for printing and manual completion by participants.
We will collect, maintain and forward all beneficiary designation forms to the ESOP Committee and will maintain electronic copies of all such forms.
Required Communications to and from Participants
We will provide online access to and collect all election forms and/or notices necessary to comply with Internal Revenue Service or Department of Labor regulations.
Lost Participant Searches
In the event that you are unable to locate a lost participant though the IRS or the DOL letter writing programs, we will use the Accurint® system to perform a lost participant search and provide you with the results.