Technical Questions and Answers Regarding
The SPARK Institute's 403(b) Plans Information Sharing -
Minimum and Comprehensive Data Elements
(Version 1.04, dated June 30, 2009)
(Q&A Last Updated - January 28, 2010)
The most current version of the Best Practices is Version 1.04 (dated June 30, 2009) and is available here.
The SPARK Institute maintains and updates this site periodically with answers to questions regarding the Best Practices for 403(b) and Related Retirement Plans, Information Sharing - Minimum and Comprehensive Data Elements (the "Data Elements" or "Best Practices"). The SPARK Institute created a standing panel, made up of representatives from various member companies that played a significant role in developing the Data Elements. The SPARK Institute and the panel review questions that are submitted and develop answers which are posted below. Answers are made widely available in order to assist all organizations that are adhering to the Data Elements Best Practices.
We encourage anyone in the 403(b) plans community that has technical questions about the Data Elements to submit them to us at data-elements.questions@sparkinstitute.org. Please include information for us to be able to contact you if necessary when you submit your questions. Questions submitted to us will be reviewed by the panel, and answered through this Q&A site to the extent possible. Please note that we are unable to answer legal questions or provide guidance with respect to company or plan specific issues and situations.
ORGANIZATIONS THAT ARE ADHERING TO THE BEST PRACTICES ARE ENCOURAGED TO CHECK THIS SITE PERIODICALLY FOR UPDATES AND RESPONSES TO ADDITIONAL QUESTIONS. NON-SPARK INSTITUTE MEMBERS THAT WOULD LIKE TO RECEIVE PERIODIC UPDATES ABOUT THE BEST PRACTICES SHOULD PROVIDE THEIR CONTACT INFORMATRION TO LARRY GOLDBRUM AT mailto:larry@sparkinstitute.org.
THIS MATERIAL HAS NOT BEEN REVIEWED, APPROVED, OR AUTHORIZED BY THE TREASURY DEPARTMENT OR THE INTERNAL REVENUE SERVICE AS MEETING THE REQUIREMENTS OF ANY APPLICABLE RULES OR REGULATIONS. THE SPARK INSTITUTE DOES NOT PROVIDE LEGAL ADVICE. USERS OF THIS MATERIAL SHOULD CONSULT WITH THEIR LEGAL COUNSEL BEFORE RELYING ON IT.
QUESTIONS AND ANSWERS
Please note that Questions 1 through 52, and Technical Issues 1 through 4, that were posted before December 31, 2008 have been archived and are available here.
Question 53: The "File Layout" section of Version 1.03 of the Best Practices (Part 1, Section A, 1) states that "[t]he extract file should be an ASCII file that is pipe "|" delimited, with no spaces between the data element and pipe at either end." Should the first data field be enclosed with the PIPE character or not?
Answer 53: Please refer to the discussion of "Coding PIPE Delimited Data" on the SPARK Institute's website located here. Examples are shown for when the first data field has a value to be reported and when the first data field is NULL because no data is being reported. (February 3, 2009)
Question 54: Are the "Header" and "Trailer" supposed to use a pipe delimited format as is the case for other fields under the Best Practices?
Answer 54: Yes. Pipe delimited should be used for the Header and Trailer records. (February 3, 2009)
Question 55: How should loan component data be reported under Part II, Section G of the Best Practices if a participant has more than 99 loans?
Answer 55: Loans 1-98 should be reported using the set of loan component data for each loan in accordance with the guidelines in the Best Practices. For Loans 99 and above, the 99th set of loan component data should be used to summarize the loan information of the remaining loans. Please refer to Part II Section G of the Best Practices for additional details. (February 3, 2009)
Question 56: Method of Reporting Loan Data - Under Version 1.03 of the Best Practices and according to Technical Question and Answer 16 on The SPARK Institute website, it appears that "M" is only a valid selection for the "Method of Reporting Loan Data" when there are no loans, otherwise, "C" and the associated components are required. Is that a correct understanding of the Best Practices?
Answer 56: Yes. (February 3, 2009)
Question 57: Part II, Section D in Version 1.03 of the Best Practices relating to "Reporting Hardship Amount Available Data" allows for two reporting methods, i.e., "M" or "C". Another vendor has advised us that they will only accept reporting method "C" and the associated Hardship Components. Is the option for reporting the maximum hardship available (i.e., method "M") still valid or are changes pending to the Best Practices to parallel the ones for loans which will require the components reporting method?
Answer 57: The Best Practices state that hardship data may be reported using either the "M" method (Maximum Hardship Amount Available") or the "C" method (Hardship Amounts are reported in component fields and the Aggregator would perform the calculation to arrive at the Maximum Hardship Amount Available through simple addition and subtraction). Certain vendors may elect to take a more restrictive view regarding how they will report or accept information. (February 3, 2009)
Question 58: How should the contributions reported in the "Account Inception-to-Date EE Contributions" and "Account Inception-to-Date 15 Year Catch-Up Contributions" in Part II, Section B be reported, gross or net (of any related charges, fees or subsequent withdrawal amounts)?
Answer 58: The "Account Inception-to-Date EE Contributions" and "Account Inception-to-Date 15 Year Catch-Up Contributions" in Part II, Section B should be reported as gross amounts (i.e., not reduced by any related charges, fees or subsequent withdrawal amounts). (February 3, 2009)
Question 59: If the "Highest Outstanding Loan Balance 12-Months" data (Part II, Section G) is not available for each loan but is available at a summary level, can an additional record be added at the end of these fields with the summary loan information?
Answer 59: No. The Best Practices already provide a mechanism for reporting loan data in summary form within the component loan fields. Although the Best Practices state that the recommended reporting method is to report individual loans, the flexibility for summary reporting has already been built in. If a vendor is unable to report data on individual loans, the vendor can leverage the summary loan reporting methodology that is already provided for. (February 3, 2009)
Question 60: Please clarify what is intended to be included in certain employee cash value fields in Part II, Section A of the Best Practices.
Part A: "EE Deferral Cash Value" - Should the amount reported in this field be the total of all deferral amounts made only or should it also include earnings?
Part B: "Rollover EE Pre-Tax Cash Value" - Should the amount reported in this field include all rollover/transfer values?
Answer 60, Part A: The "EE Deferral Cash Value" field represents the current value of Employee Pre-Tax investment source(s). The amount reported in this field should include the cumulative amount of money into and out of the specific investment source(s) and the associated earnings. Please see Question and Answer 6 for additional information. (March 6, 2009)
Answer 60, Part B: The "Rollover EE Pre-Tax Cash Value" field represents the current value of Employee Pre-Tax Rollover investment source(s). The amount reported in this field should include the cumulative amount of money into and out of the specific investment source(s) and any associated earnings. Please see Question and Answer 6 for additional information. (March 6, 2009)
Question 61: Is the distribution data defined in Part IV of the Best Practices limited strictly to 403(b) plans or would it also include this data from any accounts of associated non-403(b) plans (i.e., 401(a), 401(k), 457)?
Answer 61: The distribution data defined in Part IV of the Best Practices applies to 403(b) plans as well as any associated plans of the type defined in the Best Practices (i.e., 401(a), 401(k), 457). (March 6, 2009)
Question 62: Should Distribution Amounts that are reported under the Best Practices appear as negative or positive numbers?
Answer 62: Even though a Distribution Amount may be represented as a negative number in the vendor's administrative system (because it is a withdrawal), positive numbers should be used when reporting the Distribution Amount in the Best Practices format unless a reversal of a Distribution is being reported. If the information reported represents a reversed Distribution, then the Distribution Amount should be reported as a negative number (i.e., with a minus character in the first position). Please refer to the document, "How to Code PIPE Delimited Data" available here if you have any questions concerning the following examples. (March 6, 2009; revised January 4, 2010)
The following "Distributions Made" record reports a $50 distribution made by TPA1234
|70847|70847|459704749|||03|20090121|50.00||TPA1234
Decoded Data Element Values:
- Aggregator Plan ID = NULL
NOTE: when the first data element is NULL, and the second data element has a value, the record begins with a single PIPE as the PIPE signals the end of a data element and the beginning of the next data element. Also note that no PIPE appears at the end of a record because no data element follows.
- Employer Plan ID = 70847
- Vendor Plan ID = 70847
- Employee SSN = 459-70-4749
- Employee Account Number = NULL
- Vendor Transaction Number = NULL
- Distribution Type = 03 (In-Service Withdrawal)
- Distribution Date = 01/21/09
- Distribution Amount = $50.00
- Distribution Reason = NULL
- Vendor Source ID = TPA1234
The following record reports that a $50 Distribution was reversed
|70847|70847|569358579|||03|20090123|-50.00||TPA1234
Decoded Data Element Values:
- Aggregator Plan ID = NULL
- Employer Plan ID = 70847
- Vendor Plan ID = 70847
- Employee SSN = 459-70-4749
- Employee Account Number = NULL
- Vendor Transaction Number = NULL
- Distribution Type = 03 (In-Service Withdrawal)
- Distribution Date = 1/23/09
- Distribution Amount is a minus $50 indicating a reversal
- Distribution Reason = NULL
- Vendor Source ID = TPA1234
January 4. 2010 Revision - The "Distribution Reason" code was changed to "NULL" to conform to Version 1.04 of the Best Practices.
Question 63: There appears to be a discrepancy between the "Vendor Source ID" field which is identified as an optional field under Part II, A of the Best Practices and the same data field which is identified as a required field under Part IV, A of the Best Practices? Please clarify whether the "Vendor Source ID" field is optional or required.
Answer 63: The "Vendor Source ID" field is intended to be an optional field in Part II and IV. This oversight will be corrected in a future version but should be treated as optional now. (March 24, 2009)
Question 64: Are the seven "Cash Value Amount" fields in Part II, Section A supposed to add up to the total cash value of the account (either Gross or Net, as specified)?
Answer 64: The seven cash value fields (i.e., Employer Cash Value, EE Deferral Cash Value, Rollover EE Pre-Tax Cash Value, Rollover EE Post-Tax Cash Value, Rollover Roth Cash Value, EE Post-Tax Cash Value, Roth Cash Value) in Part II, Section A of the current version of the Best Practices (Version 1.03) should add up to the total cash value of the participant's account (either Gross or Net, as specified). Please note that the "403(b)(7) Employer Cash Value" would not be included in the calculation above because a different calculation applies under 403(b)(7) rules. Please click here for examples regarding reporting loan amount available data. (March 24, 2009)
Question 65: The examples provided on The SPARK Institute website for reporting the "Maximum Loan Amount Eligible" utilize 50% of the total cash value to arrive at this amount. Why doesn't the calculation also consider the $50,000 limit so that the maximum amount is either 50% of the total cash value or $50,000, whichever is less?
Answer 65: The examples do not mention the $50,000 limit because the total cash value amount was less than $100,000 so it had no impact. The $50,000 limit should otherwise be taken into account as appropriate. Click here for examples regarding reporting loan amount available data. (March 24, 2009)
Question 66: How should the "Total Hardship Amount Available" be reported in Part II, Section D of the Best Practices in connection with a plan that allows post 12/31/88 employer contributions to be included in the hardship amount that is available?
Answer 66: The situation identified in this question is not a common occurrence. The Best Practices do not include a separate component field for post 12/31/88 employer contributions. However, this situation can be addressed under the current Best Practices. Part II, Section D of the Best Practices provides two optional methods for reporting the "Total Hardship Amount Available."
The first method is to report the aggregate amount in the "Total Hardship Amount Available" field in Part II, Section D. The reporting party can calculate this amount as necessary to address the specific needs of each plan, and include post 12/31/88 employer contributions in the aggregate amount it reports.
The second method is to report certain individual component fields in Section II, D which include the following:
- 12/31/88 Cash Value-EE;
- 12/31/88 Cash Value-ER (if available for hardship);
- Post 12/31/88 Contributions EE;
- Post 12/31/88 Withdrawals.
Depending on how these component fields apply to the plan, the amount can be calculated by adding the components "a, b and c," and subtracting component "d." However, because the Best Practices do not include a separate component field for post 12/31/88 employer contributions, in order to use this option the reporting party can modify component "b" and report the "Employer Cash Value" that is defined in Part II, Section A of the Best Practices, provided that doing so produces the correct result under the circumstance.
Since this situation is uncommon, The SPARK Institute believes that the optional methods that are already available negate the need to make changes to the Best Practices that could require widespread programming modifications by everyone that is currently using them. We will consider further modifications with respect to this issue in connection with future releases of the Best Practices. (January 4, 2010)
Question 67: The comments for the "Maximum Loan Amount Eligible-Vendor" field under Part II, Section G of Version 1.04 of the Best Practices state that the amount is "subject to all IRC, Plan, Product, or Fund rules" but should not be reduced by outstanding loans. When reporting this field should the $50,000 maximum loan rule under IRC Section 72(p) be considered? The examples provided on The SPARK Institute website only show the calculation to be 50% of the current value. Should the exception to the 50% loan limit for loans of $10,000 or less (IRC Section 72(p)(2)(A)(ii)) be considered when reporting the "Maximum Loan Amount Eligible-Vendor" field?
Answer 67: The $50,000 maximum loan rule under IRC Section 72(p) should be considered when reporting the Maximum Loan Amount Eligible-Vendor field. The comments for Maximum Loan Amount Eligible-Vendor field states that the "Maximum Loan Amount Eligible should not exceed the IRS Maximum limit of $50K. If it does, report the value as $50K." In regards to the exception to the 50% limit, if the reporting party will issue a loan of $10K or less without regard to the 50% rule then it should report the maximum amount available based on the method it follows for determining the amount. For example, assuming the account balance at issue is $16K. If the reporting party will issue a loan for $10K because it will issue loans for under $10K without regard to the 50% rule then it should report $10K. However, if the reporting party will apply the 50% rule in this situation then it should report $8Kor 50% of the account balance. (January 4, 2010)
Question 68-A: Part II, Section F of Version 1.04 of the Best Practices is called "Non-Emergency Withdrawal Data (In Service Withdrawals)" and contains additional comments that were not in prior Version 1.03. Please clarify the intention of completing the "In Service Available Cash Value" field. Is this field completed with only 12/31/88 employee pre-tax voluntary amounts if the plan type is 403(b)(1)?
Question 68-B: What should be reported when the plan type is not a 403(b)(1)?
Question 68-C: What should be reported when the account has no 12/31/88 balance?
Answer 68-A: The reporting party should report all money available for in service withdrawals prior to taking a hardship distribution regardless of the source of the monies. The Best Practices do not restrict the sources of monies to be included in the "In Service Available Cash Value" field in Part II, Section F. (January 4, 2010)
Answer 68-B: The In Service Available Cash Value field is intended to be cumulative and includes all money available for in service distributions regardless of the source of the money. (January 4, 2010)
Answer 68-C: If the account does not have any sources of assets available for in service withdrawals then the In Service Available Cash Value field should be reported as "0.00." (January 4, 2010)
Question 69: What Distribution Type should be used when the participant has a 403(b) plan-to-plan transfer under Part IV, Section A of version 1.04 of the Best Practices? Please clarify whether Item 5 in the opening text for Part IV of Version 1.04 of the Best Practices which states that "'Transfers should be classified as a Distribution Type '01' - (Contract) Exchange" includes a 403(b) plan-to-plan transfer."
Answer 69:The Distribution Type classification may vary among vendors and aggregators. Therefore, the Distribution Type that will be used should be agreed to, as needed, by the reporting and receiving parties. The more common Distribution Types that may be used for Plan to Plan transfers are "‘01' - (Contract) Exchange," "‘03'- In Service Withdrawal," or "'06 - Separation from Service." If the reporting party has an established practice for how it classifies Plan to plan transfers it should notify the receiving party. The Best Practices do not require reporting parties to customize the classification of transfer distribution types for each receiving party so that the reporting parties can follow a single approach. This issue will be addressed more specifically in a future release of the Best Practices. (January 4, 2010)
Question 70: How should penalty free distributions made under the Heroes Earnings and Assistance Relief Tax Act of 2008 ("HEART Act") to people called into active military service be coded in the "Distribution Type" field under Part IV, Section A of Version 1.04 of the Best Practices?
Answer 70: HEART Act distributions should be coded as a "Distribution Type 03 - In Service Withdrawal," as permitted under the terms of the plan. (January 4, 2010)
Question 71: In Part II, Section G of the Version 1.04 of the Best Practices, does the Loan Status Definition "D" for Defaulted include both defaults and offset loans, or offset loans only?
Answer 71: Loan Status Definition "D" includes both. The Best Practices treat an offset loan as a defaulted loan for reporting purposes. The offset loan is considered a subclass within the overall defaulted loan class. (January 4, 2010)
Question 72: Situation #3 for using the "Defaulted" Loan Status Definition under Part II, Section G of Version 1.04 of the Best Practices states that "The participant retires or otherwise severs employment and does either repay the loan in full or continue to make payments following the separation from employment." Should this item read "...severs employment and does NOT either repay or..."
Answer 72: The word "not" was inadvertently omitted, and will be corrected in a future release. The correct text is ""The participant retires or otherwise severs employment and does NOT either repay the loan in full or continue to make payments following the separation from employment." (January 4, 2010)
Question 73-A: What Loan Status Definition should be used under Part II, Section G of Version 1.04 of the Best Practices with respect to an outstanding loan that is actively being repaid to the plan by a participant who is no longer employed by the employer (e.g., a terminated participant makes payments outside of payroll deduction)?
Question 73-B: When such loan is paid in full what Loan Status Definition should be used?
Question 73-C: How does Condition #1 under the "Active" Loan Status Definition in Part II, Section G of Version 1.04 of the Best Practices which states that "The participant who has a loan, is a participant in the plan" affect this?
Answer 73-A: The loan should be classified as "A" - Active regardless of the participant's employment status while it is being repaid. (January 4, 2010)
Answer 73-B: The loan should be classified as "P" - Paid when it is repaid in full. (January 4, 2010)
Answer 73-C: The Conditions for the Active Loan Status Definition describe the most common situations in order to provide a general definition. In most cases terminated participants do not or are not permitted to continue to repay plan loans. However, as noted above if a terminated participant is actively repaying the plan loan the loan should be classified as "A" - Active. (January 4, 2010)
Question 74: The file naming standard has the file extension as .txt. We send files out compressed/zipped and the IT industry standard is to have the last extension as .gz to indicate to the recipient that the file is compressed. Can we send the file as .txt.gz? If the response is to not allow .gz, then can/should we still compress the files? What are others doing?
Answer 74: Most firms that compress files have been using a TXT. ZIP not TXT.gz. However, there are many formats that can be used and it is ultimately up to the affected parties to decide what they will provide and accept. (January 4, 2010)
Question 75: How do you identify the changes that are made between different versions of the Best Practices?
Answer 75: Every version of the Best Practices includes a Version Control Log in an Appendix that identifies the changes that have been made. (January 28, 2010)
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