FAQ 46: ESOP--Full account being distributed instead of vested portion


I have managed to get all of the shares sold and transferred out to the cash account for those participants that have terminated employment and were paid out during the year. My next problem seems to be that it appears to be showing all of the funds as being distributed rather than just their vested account balance. Is there something further I need to do?


The Buy/Sell Shares routine calculates the amount of the distribution based on the ending balance less any forfeited amounts coded in the employees record (whether they are actually forfeiting, or just forfeitures in suspense). As noted in the on-line Help for the Buy/Sell Shares routine, forfeited amounts should be calculated prior to running the routine in order for the distribution amounts to reflect just the vested balance.

Ideally, you should have done the following:

- Assuming that the employee initially has a terminated status code and that status code's group is included in the "Groups with Forfeitures in Suspense" field in the source specs, when calculations are run the non-vested portion of the employee's account will be stored in the "Amount Forfeited" field in the employee's record. On an ongoing basis, this affects nothing but the calculation of the vested amounts, since the amounts are being treated as "in suspense", rather than actual forfeited amounts. These forfeited amounts will be recalculated each time calculations are run, as long as their status code's group is in the "Groups with Forfeitures in Suspense" field. If you change them to a status "Q", and need the forfeited amount "refreshed" for some reason, you should also make sure that group B (assuming that you have added status "Q" to group B on the Group Definition screen) is included in that field as well.

- Assuming that the above has been calculated, when you run the Buy/Sell Shares routine to Convert All Shares to Cash, the system will just convert the vested portion of the account to shares and leave the non-vested portion to forfeit and reallocate. Those amounts forfeited have to be calculated prior to running the Buy/Sell Shares routine for the routine to take into account just the vested shares and cash.

- During the running of the Buy/Sell Shares routine, you would want to check the box to "Store Calculated Withdrawals" so that the type 4 transactions would be created. Then once you processed the transactions, you should see the vested portion of the shares transferred to the cash account, and a withdrawal for the vested portion of the cash account plus the proceeds from the sale of his or her vested shares. Any amounts that remain in the share and cash accounts would then be forfeited and reallocated to the remaining participants.