Distributions Processing

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Distributions Processing System

Status: Roadmap (2026-2027) An intelligent platform for automating ESOP distribution processing—from triggering event identification through final payment and tax reporting.

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The Challenge

ESOP distribution processing is complex and error-prone:

• Multiple triggering events (retirement, termination, death, disability)
• Complex vesting calculations
• Various distribution options
• Tax withholding requirements
• Regulatory compliance (IRC 409, ERISA)
• Repurchase obligation tracking
• Beneficiary management

Current reality for TPAs and plan sponsors:

• Manual calculations prone to errors
• Time-consuming participant communications
• Complex tax withholding calculations
• Difficult tracking of payment schedules
• High risk of compliance violations

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The Solution

Automated, intelligent distribution processing:

• AI-powered triggering event identification
• Automated vesting and valuation calculations
• Smart distribution options analysis
• Automatic tax withholding
• Integrated payment processing
• Comprehensive compliance tracking

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Key Features

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Triggering Event Management

Intelligent event tracking:

• Automated event identification from census data
• Manual event entry with validation
• Beneficiary designation management
• Required documentation tracking
• Timeline and deadline management

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Distribution Calculations

Accurate, automated calculations:

• Vested account balance determination
• Share valuation at distribution date
• Distribution timing calculations
• Installment option modeling
• Put option calculations
• IRA rollover amounts

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Distribution Options

Help participants choose wisely:

• Lump sum vs. installment comparison
• Tax impact modeling
• IRA rollover analysis
• Put option implications
• Personalized recommendations

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Tax Withholding

Automatic, compliant tax handling:

• Federal income tax withholding
• State tax withholding (where applicable)
• FICA calculations (if applicable)
• 1099-R generation
• Year-end tax reporting

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Payment Processing

Streamlined payment execution:

• Direct deposit setup
• Check generation
• IRA custodian coordination
• Payment confirmation tracking
• Failed payment handling

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Participant Communications

Clear, timely communications:

• Distribution notice generation
• Election form delivery
• Confirmation letters
• Payment notifications
• Tax document delivery

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Compliance Monitoring

Stay compliant automatically:

• IRC Section 409 compliance
• ERISA distribution rules
• Put option requirements
• Minimum distribution rules
• Required documentation

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Repurchase Tracking

Integrate with repurchase obligations:

• Cash requirement forecasting
• Payment schedule tracking
• Put option exercise monitoring
• Future liability projection

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Benefits

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For Plan Administrators

Operational efficiency:

• 80% reduction in processing time
• 95% fewer errors in calculations
• Automated compliance checking
• Scalable operations

Risk reduction:

• Consistent processing
• Complete audit trails
• Regulatory compliance
• Error prevention

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For Plan Sponsors

Cost savings:

• Reduced TPA fees
• Fewer compliance issues
• Less internal time spent

Better participant experience:

• Faster processing
• Clearer communications
• More accurate calculations

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For Participants

Better service:

• Faster distributions
• Clear communication
• Accurate calculations
• Easy decision-making

Financial planning:

• Distribution options comparison
• Tax impact understanding
• Retirement planning support

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Technology

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AI-Powered Automation

Intelligent agents handle:

• Event identification and validation
• Calculation accuracy checking
• Document generation
• Communication personalization
• Exception identification

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Integration Capabilities

Connect with:

• Payroll systems
• Banking/payment systems
• IRA custodians
• Tax filing systems
• Document management
• Repurchase forecasting systems

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Security & Compliance

• SOC 2 Type II certified
• Bank-level encryption
• Secure payment processing (PCI DSS)
• Complete audit trails
• Regular security audits

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Reporting & Analytics

Comprehensive reporting:

• Distribution activity tracking
• Payment status monitoring
• Tax reporting
• Repurchase obligation impact
• Historical analysis

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Workflow Example

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Standard Distribution Process

1. Event Identification
   • System detects triggering event
   • Validates event type and date
   • Identifies required documents
2. Calculation
   • Determines vested balance
   • Calculates distribution amount
   • Models distribution options
   • Computes tax withholding
3. Participant Election
   • Sends distribution notice
   • Presents options with modeling
   • Receives and validates election
   • Confirms choices
4. Processing
   • Executes payment
   • Applies tax withholding
   • Coordinates IRA rollovers
   • Confirms completion
5. Reporting
   • Generates 1099-R
   • Updates repurchase tracking
   • Creates audit documentation
   • Archives all records

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Pricing Model (Proposed)

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Per-Distribution Pricing

Simple, transparent costs:

• $50-150 per distribution
• Based on complexity
• All features included
• Volume discounts available

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Subscription Option

For high-volume processors:

• Monthly fee + per-distribution
• Unlimited participants
• Priority support
• Custom integrations

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Roadmap

Development timeline:

• 2026 Q1-Q2: Requirements gathering with TPAs
• 2026 Q3-Q4: Core development
• 2027 Q1: Beta testing
• 2027 Q2-Q3: Phased rollout
• 2027 Q4: General availability

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Design Partners Wanted

We’re seeking TPAs and plan sponsors to help design this system: What we’re looking for:

• TPAs processing 50+ distributions/year
• Plan sponsors with distribution challenges
• Forward-thinking organizations
• Commitment to feedback and testing

Benefits:

• Shape product features
• Early access
• Preferred pricing
• Competitive advantage

Join as a Design Partner

Express interest

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Why Automate Distributions?

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Reduce Errors

Manual processing leads to:

• Calculation mistakes
• Tax withholding errors
• Compliance violations
• Participant dissatisfaction

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Save Time

Automated processing:

• 80% less time per distribution
• Handle more volume
• Focus on exceptions
• Scale operations

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Improve Compliance

Automated compliance:

• Built-in rule validation
• Complete documentation
• Audit trail generation
• Regular updates for law changes

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Better Experience

Participants get:

• Faster processing
• Clearer communications
• Better decision support
• Accurate calculations

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Get Notified

Stay updated on development progress:

Get Launch Updates

Subscribe to updates

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Questions?

Contact Us

Ask about distributions processing