After carefully considering goals and objectives, Benefits Administrators can illustrate various plans, using actual census data. We can then assist in the selection of the plan that is best suited for a company’s needs and objectives.
Utilizing constantly updated software to increase efficiency, Benefits Administrators, assists in administering plans with competence and concern. Our staff of professionals is committed to providing timely and accurate reports that give our client a clear, up-to-date profile of all activities.
Contract Administration Services
Benefits Administrators can assist you with record keeping and compliance for employee benefit plans. Our services include:
Maintaining and updating employee census data for each client
Applying the rules of each plan to determine eligibility for participation, benefits, contributions and forfeitures
Preparing employee account statements, customized to each employee benefit plan
Calculating contributions, forfeitures, investment earnings and allocations to participants’ accounts
Conducting compliance tests, including: top-heavy testing, IRC section 401(a)(4) for nondiscrimination, IRC section 410 coverage test, ADP and ACP tests and IRC section 415 limits
Compiling data and preparing all necessary IRS and Department of Labor reports, including forms 5500 and 1099R, as well as the Summary Annual Report
Monitoring required distributions for 5% owner participants over age 70½
Defined Benefit Plans
The Pension Benefit Guaranty Corporation (“PBGC”) guarantees, within specific limits, benefits under defined benefit plans. Floor offset plans and cash balance plans are defined benefit plans which incorporate certain features of defined contribution plans.
Profit Sharing Plans
It is not necessary for the employer to have either current or accumulated profits to permit employer contributions. In-service distributions may be offered in profit sharing plans.
Although it is typical for employer contributions to be allocated on the basis of the current year’s compensation, there are other optional formulas. These include permitted disparity which provides additional contributions for employees making more than the Social Security taxable wage base.
Profit sharing contributions may also be made on the basis of cross-testing. Such plans are also called age-weighted or new comparability plans. Contributions are usually increased for older employees and owners in such plans. As a rule of thumb, they work very well if the owner is at least ten years older than any other eligible employee.
Money Purchase Pension Plans
Benefits may be paid only upon death, disability, separation from service or retirement. No in-service distributions are permitted prior to the attainment of normal retirement age under the terms of the plan.
Annual salary deferrals are limited by Section 402(g)(1). Recent limits have been as follows:
Catch-up contributions are permitted for participants age 50 or older. Such contributions are not subject to the limitations cited above, ADP testing or the annual additions limitation of $52,000. Catch-up contributions can be made in the following amounts for the specific years:
Deferrals can be made on a pre-tax basis or in a post-tax basis, known as Roth contributions. If Roth contributions are held within the 401(k) plan for at least five years, the earnings are distributed tax-free when the participant has a distributable event. Unlike Roth IRA’s, there is no compensation limit for Roth contributions to a 401(k) plan, so highly compensated employees can use this option.
401(k) plans are rapidly becoming the retirement plans of choice for companies of all sizes. Benefits Administrators specializes in administering all the details, including:
- Consulting on plan design
- Document drafting
- Monitoring ERISA Section 404(c) compliance
- Discrimination testing
- Electronically accepting payroll information
- Preparing required forms for loans, taxes and withholding requirements
- Employee benefit statements for participants
- Employer reports and required governmental forms
401(k) plans utilizing the safe harbor rules must provide for a prescribed level of either matching contributions or nonelective (profit sharing) contributions for all eligible non-highly compensated employees. Plans can satisfy this by one of the following methods:
Matching contributions for all non-highly compensated employees in an amount equal to (i) one hundred percent (100%) of the amount of each participant’s elective deferrals that do not exceed three percent (3%) of compensation plus (ii) fifty percent (50%) of the participant’s elective contributions that exceed three percent (3%) but that do not exceed five percent (5%) of the participant’s compensation; or, nonelective contributions on behalf of each eligible non-highly compensated employee of at least three percent (3%) of the participant’s compensation.
The safe harbor matching contributions or nonelective contributions must be 100% vested nonforfeitable when paid to the trust fund. Withdrawal of any safe harbor contributions would be subject to the distribution rules applicable to all 401(k) plans. Such contributions may not be withdrawn as hardship distributions.
Employee Stock Ownership Plans (ESOPs)
New Comparability Plans
Nonqualified Retirement Plans
Benefits Administrators can act as a 3(16) fiduciary on behalf of a qualified retirement plan and take on certain responsibilities that are typically provided by the plan sponsor. We can provide the following services:
Distribution services – We would determine eligibility for distributions on termination of employment, death, disability or retirement; review plan terms to determine whether and to what extent participants are entitled to distributions from the plan; approve or deny the requested distribution; and direct the vendor to process the requested distribution if approved.
QDRO Administration Services – We would process Qualified Domestic Relations Orders (QDRO) in accordance with terms of the plan and the plan’s QDRO procedures and determine whether the form of the proposed QDRO meets the requirements of the plan and give direction to the record keeper to carry out the terms of the court approved QDRO.
Submission of Payroll Data – We would not process payrolls for the employer, but we would submit data to the investment platform for the employer.
Section 204(h) of ERISA mandates that participants and beneficiaries must be given written notice of the termination at least 45 days prior to the effective date of the Plan’s termination. (This time frame is only 15 days for small plans).
The Plan Sponsor must adopt corporate resolutions terminating the Plan.
An amendment to the Plan is also required.
If these steps are not taken, the Plan may be deemed to still be active. This could result in additional employer contributions to the Plan not anticipated by the Plan Sponsor. The Plan Sponsor can also be charged an excise tax of $100 per individual per day for failure to give the Section 204(h) notice.