Method and system for administering the hedging of an employee deferred compensation plan using swaps

A method for administering, by at least one specifically programmed computer, a process of hedging of at least a portion of at least one plan notional investment of at least one nonqualified deferred compensation plan in which a plan sponsor has hedged its liability under the at least one nonqualified deferred compensation plan for plan notional investments of deferred compensation amounts, made to a plurality of participants in the at least one nonqualified deferred compensation plan, using at least one hedging instrument comprising at least one total return swap, the method comprising:

• calculating, by the at least one specifically programmed computer, at least one swap reference fund settlement amount by obtaining a current balance on a current payment settlement date of at least one swap notional principal amount by at least (a) adding at least one notional trade and subtracting a previous balance on a previous payment settlement date for the at least one swap notional principal amount;
• calculating, by the at least one specifically programmed computer, at least one swap index leg settlement amount based at least in part on (a) the previous balance on the previous payment settlement date for the at least one swap notional principal amount and (b) at least one swap interest benchmark rate and a number of days between the current and the previous swap settlement dates to calculate the at least one swap index leg settlement amount for at least a portion of the at least one swap notional principal amount;
• comparing and reconciling, by the at least one specifically programmed computer, the swap settlement amounts to amounts calculated by a swap provider.

A method for administering, by at least one specifically programmed computer, a process of hedging of at least a portion of at least one plan notional investment of at least one nonqualified deferred compensation plan in which a plan sponsor has hedged its liability under the at least one nonqualified deferred compensation plan for plan notional investments of deferred compensation amounts, made to a plurality of participants in the at least one nonqualified deferred compensation plan, using at least one hedging instrument comprising at least one total return swap, the method comprising:

• obtaining, by the at least one specifically programmed computer from at least one source at least the following data:
• a) at least one notional investment amount for at least one plan participant in the at least one nonqualified deferred compensation plan offered by the plan sponsor, comprising at least one of:
• i) at least one allocation into at least one plan notional investment for the at least one plan participant,
• ii) at least one additional deferral for the at least one plan participant to the plan sponsor's at least one nonqualified deferred compensation plan,
• iii) at least one distribution for the at least one plan participant from the plan sponsor's at least one nonqualified deferred compensation plan, and
• b) at least one amount paid to and received from the plan sponsor and a swap provider, based at least in part on the at least one total return swap, wherein the at least one amount comprising at least one of:
• i) at least one swap index leg settlement or accrued amount,
• ii) at least one swap reference fund settlement or accrued amount,
• iii) at least one change in at least one notional principal amount of the at least one total return swap, and
• iv) at least one change in at least one swap reference fund allocation for the at least one total return swap;
• calculating, by the at least one specifically programmed computer at least one swap settlement or accrued amounts for the at least one plan participant and at least one return or loss attributable to at least swap reference fund, subaggregated to each plan participant in the at least one nonqualified deferred compensation plan;
• storing and accumulating, by the at least one specifically programmed computer, the subaggregated total swap settlement or accrued amounts attributable to each plan participant in the at least one nonqualified deferred compensation plan offered by the plan sponsor;
• and
• reporting, by the at least one specifically programmed computer, the accumulated swap settlement or accrued amounts for each plan participant in the plan sponsor's at least one nonqualified deferred compensation plan.