HomeMy WebLinkAbout1994 12 14 Other
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CITY OF WINTER SPRINGS, FLORIDA
1126 EAST STATE ROAD 434
WINTER SPRINGS. FLORIDA 32708-2799
Telephone (407) 327-1800
December 14, 1994
Dianne Garcia, Trust Officer
Sun Bank Trust and Investment
Services Group
Corporate Employee Benefits Div.
P.O. Box 3808
Orlando, Florida 32802
Re: City of Winter Springs
Money Purchase Pension Plan
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Dear Ms. Garcia:
Thank you for your letter of December 6, 1994 regarding the costs
of more frequent evaluations of employee accounts. In our phone
conversation this past week, you indicated ,that my suggestion of
evaluating the account of an employee who leaves between evaluation
periods, (other than on September 30th) by using an approximation
method, would be found illegal by the IRS, and other federal
pension agencies.'
You mention in your letter the possibility for an employee to leave
his account in the "Plan" until the next evaluation date. We would
have to amend the plan by City ordinance because the plan presently
does not permit an employee to do this. If the City approved semi-
annual evaluations, (at an increased cost of $578.20), and
permitted participation up to the date of the next evaluation, an
employee leaving would, at his or her option, wait no more than
five (5) months to receive the accumulated account in full, subject
to any changes in the Fund's earnings, (or losses).
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Page 2
Dianne Garcia
December 14, 1994
By copy of this letter, and your letter of December 6, 1994 to our
Trustees, I will ask them to consider this subject at our January
31, 1995 quarterly review meeting. I would expect Mr. Robert and
yourself to attend City Hall at 7:30 P.M.
Sincerely,
t2d-~
Art Hoffmann,
Chairman Pension Fund Trustees
AHlsaf
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cc: Winter Springs Pension Fund Trustees
Mr. Philip Robert, Sun Bank Investment Services
Mr. John Govoruhk, City Manager
Mr. Harry Martin, Finance Director
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City of Winter Springs
Fee Comparison
Annual Versus Semiannual and Quarterly Processing
Plan Administration Fees (Annualized)
Annual Semiannual Quarterlv
Base Fee $1,000,00 $1,000,00 $1,000,00
7r"/l.!lr I ..J
Processing Fee 1,944.00'tG,1 X-t) *"2,457,00 4,075,50
(assume 163 participants) ----;>_.~
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Participant Statements** 0.00 65,20 195.60
(assume 163 participants)
Complexity Charges 0,00 0.00 0.00
Form 5500 0,00 0,00 0,00
Testing 0.00 0,00 0,00
I""'" Total Estimated Annual $2,944.00 $3,522.20 $5,271,10
PASS Fee -------- -------- --------
-------- -------- --------
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c} + ylLltro.f b~ 7) .
l..... '
1 ~ (, x. 2 _': .2. ~ '~,'1
** You can eliminate the participant statement charge by giving statements once per year. _
only at the Plan year-end cycle,
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City of Winter Springs
Fee Comparison
Annual Versus Semiannual and Quarterly Processing
Plan Administration Fees (Annualized)
Annual Semiannual Quarterlv
Base Fee $1,000,00 $1,000.00 $1,000.00
Processing Fee 1,944,00 2,457,00 4,075,50
(assume 163 participants)
Participant Statements** 0,00 65.20 195,60
(assume 163 participants)
Complexity Charges 0,00 0,00 0,00
Form 5500 0,00 0.00 0.00
Testing 0,00 0,00 0.00
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Total Estimated Annual $2,944,00 $3,522,20 $5,271.10
PASS Fee -------- -------- --------
-------- -------- --------
** You can eliminate the participant statement charge by giving statements once per year
only at the Plan year-end cycle,
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Trust and Investment Services Group
Corporate Employee Benefits Division
P,O, Box 3808
Orlando, Florida 32802
407237-4254
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December 6, 1994
Mr. Arthur Hoffmann
Chairman
City of Winter Springs
1126 East State Road 434
Winter Springs, FL 32708
Re: City of Winter Springs
Money Purchase Pension Plan
Dear Mr. Hoffmann:
Per your request, I have attached a worksheet indicating the
estimated cost for employee valuations. The calculations are
shown for annual, semiannual, and quarterly processes. As we
have discussed in the past, in order for you to change from the
current annual valuation process, your document would have to
allow for more frequent calculations. Your attorney can amend
the Plan, if necessary, to allow for any changes that you would
like to make.
~
The earnings on your Money Purchase Pension Plan are allocated to
all participants at specific periods as specified in your docu-
ment. The employee would receive any earning/losses due to his
balance as long as his vested portion is still in the Plan at
year-end. The same would be true if you used a semiannual or
quarterly valuation cycle. For example, if Joe Smith terminated
August 31 and did not take his distribution until after the
September 30 year-end, his balance would be eligible for
earnings/losses. If he terminated on August 31 and took his
distribution of benefits prior to September 30, he would forfeit
any earnings for the Plan year in which he took his distribution.
He would not receive earnings at September 30. The same would be
true using the quarterly valuation cycle. If Joe Smith
terminated on May 15 and wanted his distribution immediately, he
would receive his balance as of the prior quarter (March 31). If
he left his money in the Plan until after June 30 (the next
quarter-end), he would get the earnings/losses for the quarter
ending June 30.
The valuation process is calculated for all participants. We
cannot process a valuation for one or two participants at a time,
nor can the calculations be done out of cycle on a Money Purchase
Pension Plan. Many Municipalities utilize the Defined Benefit
form of Pension Plan, which are actuarial1y calculated. This
type of Plan is based on future benefits and can be calculated
for one participant at any given time.
~
A SunTrust Bank
Page 2
~ Mr. Arthur Hoffmann
December 6, 1994
I hope that this information answers your questions regarding
valuations within your Plan. If you have any questions, please
do not hesitate to call me.
Sincerely,
~~
Dianne Garcia
Trust Officer
cc: Tim Helsel
SunBank, N.A.
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