GTS Introductory Guide

What is GTS? The GTS ‘tech sheet’ provides this information: http://www.blazessi.com/TechSheets/GTS_TechSheet.pdf. GTS is a licensed product: By installing and/or using the GTS product or its results you have indicated that you have read, understand and accept all provisions of the GTS license and subscription agreement. Please protect your investment in GTS and the proprietary and trade secret information of its developers by following all terms of the GTS license agreement. Presentation and Use of GTS Results: Significant effort has been made to make GTS useful, compliant with current statutes and regulations and conforming to the methodology of the industry. However it is entirely the responsibility of the user to review the illustrated values produced by GTS and to make a judgment as to the suitability of this information for the client. User-provided Hardware and Software Environment: An appropriate, user-provided hardware and software environment is required for GTS. For proper operation and full functionality of GTS, the user must provide a hardware and software environment, which is substantially the same at those, used to test GTS. GTS is tested using the recent versions of the Microsoft Windows operating system. GTS is tested using the recent versions of Microsoft Excel. From time-to-time Microsoft and other vendors establish sunset dates for hardware and software. After such a sunset date is past, GTS is no longer tested on those obsolete hardware or software platforms. Microsoft Excel Security Requirements: Microsoft Excel has security measures within it to prevent the execution of ‘malware’ – malicious software embedded within a workbook. These security measures generally prevent the functioning of a workbook, which contains a macro, which is a software program to perform calculations or other data manipulation in an Excel workbook. The user may relax the Microsoft Excel security measures when that user believes that the workbook and associated macros are ‘safe’. Before delivery of the GTS product and maintenance updates, they are scanned by up-to-date ‘malware’ identification software (‘virus’ scanning). A responsible user will also employ ‘virus’ scanning software on any files, including GTS files, within their environment. GTS incorporates Microsoft Excel macros to perform the GTS calculations. The user must properly set the security level on their properly licensed, installed and updated version of Microsoft Excel so that these macros can be run. This security setting takes various forms depending on the user’s version of Microsoft Excel, although generally it is found in the Tools > Macros > Security menu item. Purpose of GTS: GTS is a tool to design and illustrate IRC401(a)-qualified defined benefit and defined contribution profitsharing retirement plans, which are subject to non-discrimination testing. It can be used for ‘What if?” studies of existing plans or for proposed plans not yet in effect. GTS is not intended to be a replacement for a valuation system or to produce the required annual deposit ("cost") of a defined benefit plan, which can only be obtained by an actuary in accordance with IRS funding rules.

Data input and Plan Specifications:

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GTS Introductory Guide Data input required from the user of GTS is indicated by a light gray cell background color. The census data can be copied from another compatible source program and pasted into GTS or else manually input. Each employee can be assigned to a census subgroup or their anticipated plan sponsor contribution or benefit may be specified. Ineligible employees are assigned to Census Subgroup 99, but these employees must still have basic census data, including compensation, entered for them in GTS. The plan specifications may be manually edited. Yes/No cell values use 0 for no (or do not use this option) and 1 for yes (or use this option). Plan deduction rules: GTS provides information regarding the IRC404 combined plan maximum deductible contribution rules. This information is an estimate for illustration purposes only since it does not reflect the actual plan contributions made. Actual plan contributions can only be determined after the plans’ annual valuation has been performed and in the case of a defined benefit plan, the valuation must be performed under the supervision of an Enrolled Actuary. Communicating the Required Contribution for a Cash Balance Defined Benefit Plan: Care must be taken when presenting the theoretical cash balance contribution for the plan to your client. The client may assume that the plan “cost” or current actual contribution will be the sum of the ‘theoretical cash balance contributions” which are added to each participant’s theoretical cash balance account to define the plan benefit at retirement. This will not be the case. You should discuss with the plan’s Enrolled Actuary the funding method to be used, and the assumptions, as well as the valuation date to be used, prior to communicating the plan “cost”. In addition it may be wise to recommend a larger actual plan contribution to keep plan assets at a level (110% or more) of liabilities, in order to insure lump sums can be paid to HCEs. Starting in 2008 plan years, PPA2006 specifies the plan’s funding method and assumptions including ‘segmented’ interest rates to determine the minimum required and maximum deductible actual contributions for the plan. These rules mean that the plan’s minimum required contribution and the plan’s maximum deductible contribution will not necessarily be the same as the sum of the theoretical cash balance contribution for the plan participants. Limits on the Number of participants: Although a Microsoft Excel worksheet can have 64,000+ rows of data, GTS is designed to accommodate a maximum of 1000 employees. Depending on customer requests, GTS can be expanded to process a census greater than the current limit. Note that GTS does not provide support for the ‘105% IRC417(e)’ prong of the IRC415 maximum defined benefit limit calculation which applies if a defined benefit plan is being illustrated with more than 100 employees in the census. The current limit on employees implies that the Combined NAR/MVAR has a limit on HCE’s of 20% maximum number of employees in the census. Advanced Features of GTS requiring careful attention of the User: • Non-discrimination Testing of a Defined Benefit Plan on a Benefits Basis: Additional user input is required in the “Misc Calc” worksheet. •

Non-discrimination Testing combining a DB Cash Balance Plan and a Traditional DB Plan:

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GTS Introductory Guide The user must indicate that some employees’ defined benefit is based on the cash balance formula and other employees’ defined benefit is based on a traditional formula. Additional user input is required in the “Misc Calc” worksheet. •

Testing a Defined Contribution Profit Sharing plan on an Accrued-to-date Basis: The IRC401(a) non-discrimination tests may be performed either as a single DC plan or combined with a defined benefit plan tested on the same basis. Additional user input is required.

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Workbook and Worksheet Protection The GTS workbook and worksheets have been ‘protected’ and some columns ‘hidden’ using features of Microsoft Excel. The purpose of this ‘protection’ is to avoid the inadvertent modification of macros, cell validation, cell relationships and calculated results. The MVAR and NAR worksheets are not ‘protected’ in order for the macros to run. Protection does not prevent the experienced Microsoft Excel user from reviewing the details of the GTS workbook using the protection password "12345". Modifications may by a GTS user are entirely the responsibility of the user. Such user-implemented modifications may prevent the proper operation of GTS and could prevent the application of future maintenance updates of GTS.

Maintenance Updates and Customer-requested Enhancements: GTS and GTS maintenance updates are available from BLAZE SSI Corp. on an annual subscription basis. Consult the license and subscription agreement for details. BLAZE SSI Corp.[the exclusive distributor of the GTS product] and George Taylor [the designer of the initial version of the GTS product and the maintainer of the pension-technical features of the GTS product] welcome your comments and suggestions. If you are a GTS subscriber through BLAZE SSI Corp. you may contact the BLAZE SSI HelpLine via e-mail at [email protected] and provide the staff with you comments, suggestions and reports for analysis.

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GTS Introductory Guide GTS Licensing Options: • GTS is licensed on an annual basis with either ‘unlimited use per credential’ or ‘per illustration billing’. ‘Unlimited use per credential’ licensing is offered to support heavy use of GTS on an economical basis. ‘Per illustration billing’ (GTS On-Demand) licensing is offered to support limited use of GTS on an economical basis. Both licensing options encourage an increased GTS user base which assures future availability and enhancement of the system. •

When the ‘Test_Summary’ worksheet is activated by the user, the GTS web server records information about the illustration being prepared. The information recorded is: • The user’s credential • The user-entered plan name • The number of employees in the census • The ‘new’ or ‘existing’ status of the illustration.

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Information recording occurs the first time the ‘Test_Summary’ worksheet is activated for an illustration in the current GTS work session. The recorded information is maintained confidentially on the GTS web server.

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An illustration is considered ‘new’ if either the date of birth of the 1 employee on the ‘Census’ worksheet or the Valuation Date on the ‘Assumptions’ worksheet is modified. When starting a new GTS work session, the illustration in effect at that time is considered ‘new’.

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An illustration is considered ‘existing’ if the data set has been opened using the Open button on st the ‘Census’ worksheet and neither the date of birth of the 1 employee on the ‘Census’ worksheet or the Valuation Date on the ‘Assumptions’ worksheet is modified.

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Only editing the value of either of these two fields will change the status of an illustration to ‘new’. Editing any other GTS user-input fields will not change the status of the illustration. Thus once information has been collected about the current illustration in the current GTS work session, it will not be collected again in that GTS work session. The user may add additional employees and make modifications to all the other GTS fields [except the two fields noted above], including employee census fields, plan provisions, testing assumptions or census-subgroups and activate the “Test_Summary” worksheet as often as necessary.

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Unlimited Use Per Credential License: If the ‘unlimited use per credential’ option is customer-selected, the information recorded by GTS when an illustration is prepared is used for statistical purposes only to improve future versions of GTS. The user may activate the ‘Test_Summary’ worksheet any number of times for any illustration.

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Per Illustration Billing (GTS On-Demand): If the ‘per illustration billing’ option is customer-selected, the information recorded by GTS when an illustration is prepared is used to establish the license cost for that customer.

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The first time during a GTS work session that the ‘Test_Summary’ worksheet is activated for a ‘new’ or ‘existing’ illustration, a billing transaction is created on the GTS web server and the illustration is considered ‘billed’. During the same GTS work session, the illustration remains in ‘billed’ status, so that subsequent activations of the ‘Test_Summary’ worksheet results in no additional billing. Please contact [email protected] for the latest GTS ‘per illustration billing’ license costs.

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Messages Presented on the Test_Summary Worksheet: Two messages may be displayed when the “Test_Summary” worksheet collects information about the current illustration and optionally performs ‘per illustration billing’. These messages will be presented if the user has selected the ‘Per Illustration’ GTS license or if the system cannot determine the license status. The information in these messages is important only for those customers who have licensed GTS on the basis of ‘per illustration billing’. The first message box alerts the user to optional billing transaction which is about to be created and provides an option not to continue with the billing:

The second message box is presented after the illustration information has been collected by the GTS web server. This message describes the information collected and, if ‘per illustration billing’ has been selected by the customer, provides the associated ‘Illustration Transaction Id’ which will appear on the invoice. The ‘Illustration Transaction Id’ values are not necessarily consecutive numbers for a specific user. An option is provided to hide this message during the current GTS work session.

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The actual message box format which is presented may be cosmetically different than those illustrated above because of differences in the Microsoft operating systems in use on client workstations.

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