I tend not to involve myself in politics. I’m much more comfortable in the world of data, where everything is determined by incontrovertible ones and zeroes instead of who happens to be better at arguing. That said, I thought I’d try to be a little topical today.
In 1999, right around the time Mitt Romney was leaving to go run the Olympics, Bain & Company decided to terminate their ESOP (and I’m not saying one has anything to do with the other—Romney was much more involved with Bain Capital than Bain & Company). This is not unusual. Lots of companies have ESOPs, and lots of companies terminate them. Also not unusual is the fact that Bain wanted to roll some of the money in the ESOP into another plan—in this case, Bain’s 401(k).
What does seem unusual, though, is how the money got from Point A to Point B, and whether it did at all.
Here’s what the data says, and the questions it raises:
- The auditor’s report shows benefits paid in the amount of $81.2 million, but the 5500 only reports $76.9 million.
- Why does the auditor’s report disagree with the 5500 to the tune of $4.3 million?
- According to the 5500 (not the auditor’s report), $4.3 million was transferred out of the plan to… somewhere.
- Why did the auditors’ report list that money under benefits paid, but the 5500 listed it separately as a “transfer”?
- The auditor’s report mentions that some of the money would be transferred to the Bain 401(k) plan (it doesn’t say how much).
- So… how much?
- According to the 5500, the amount transferred to the 401(k) was zero.
- So it couldn’t have been the $4.3 million… right?
- The auditor’s report for the 401(k) during the same timeframe indicates that the company made a “discretionary” contribution to the plan from the ESOP, but lumped it into Employer Contributions.
- How much was the discretionary contribution?
- The amount listed for Employer Contributions on the 401(k)’s 5500 was $1.3 million.
- How much of that was the discretionary contribution versus run of the mill employer contributions?
- What happened to the $4.3 million? Where did it go?
I’m not implying anything or making any sort of statement. I’m simply confused by what seems like some intensely obfuscating reporting on the part of Bain and PriceWaterhouseCoopers.
Is there an IQPA or plan auditor in the house who can shed some light on the subject?
Free copies of these 5500s for anyone interested…
