Important Approaching Deadlines Please make note of these important approaching deadlines for calendar year plans:

Transcription

1 Important Approaching Deadlines Please make note of these important approaching deadlines for calendar year plans: December 31, 2018 Final deadline for processing corrective actual deferral percentage (ADP)/actual contribution percentage (ACP) distributions or, if using the current year testing method, deadline for making qualified non-elective contributions/qualified matching contributions to correct ADP and/or ACP test failures for the 2017 plan year. Deadline to sign amendments that must be in place before the beginning of the 2019 plan year. Deadline for 2018 annual required minimum distributions that are not first year distributions. Last day of plan year following plan year-end Last day of plan year Same date for all plan years January 15, 2019 Last half of January Deadline to remit 2018 employee deferrals to ensure inclusion in (g) and 457(e) deferral limit monitoring if applicable. Deadline for the submission of 2018 census data to ensure completion of all applicable testing by March 15, Same date for all plan years Please see date indicated in your census communication If your plan year begins on a date other than January 1, please adjust the dates to coincide with your plan year. Not all deadlines are based on the plan year. Examples of deadlines not based on the plan year include those related to return of excess deferrals (April 15), a participant s first required minimum distributions (April 1) and Form 5330 filing for prohibited transactions (last day of the 7th month after the end of the tax year of the employer or other person who must file the Form 5330). Under Internal Revenue Code section 7503, when a deadline falls on a weekend (i.e., Saturday or Sunday) or a legal holiday, the performance of such acts shall be considered timely if completed the next business day. However, corrective distributions and contributions should be processed the day before the weekend or legal holiday.

2 New 1099-R Code Code M has been added to the R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc. to indicate a qualified plan loan offset. A loan offset occurs when a participant loan is determined to be in default, and the participant has otherwise met a reason for distribution. Loans in default for participants who are in-service, and not eligible for distribution, are deemed but not offset until after such time that a reason for distribution has been met. Participant loans outstanding at the time of lump-sum distribution are offset. Loan offsets may be eligible for rollover and, if eligible, the participant s rollover period is extended to the participant s due date (plus extensions) for filing their Federal income tax return. See Retirement Plans FAQs regarding Loans for more information about loan offsets.

3 Internal Revenue Service Issues Proposed Hardship Regulations In response to the Bipartisan Budget Act of 2018, the Internal Revenue Service (IRS) recently issued proposed regulations related to hardship distributions. If OneAmerica provides document services, after the proposed regulations are finalized, we will prepare an amendment for hardship distributions that: Removes the requirement of a six-month suspension of deferrals following a hardship withdrawal o Required for distributions in 2020 o o Distributions made after January 1, 2019, will have no suspension Suspensions on distributions made prior to January 1, 2019, will remain in effect until the suspension period elapses Include earnings of 401(k) elective deferrals (not 403(b) deferrals) in the balance eligible for withdrawal Allow hardship withdrawals for expenses and losses in an area designated as a disaster area by the Federal Emergency Management Agency Eliminate the requirement that a participant first take a plan loan before requesting a hardship withdrawal If you want to make qualified non-elective contributions (QNECs), qualified matching contributions (QMACs), safe harbor contributions and the earnings associated with these contributions eligible for hardship distribution, you may request a separate plan amendment. The amendment that we adopt as the sponsor of the document will not include these provisions. If OneAmerica does not provide document services for your plan: Please forward the amendment that reflects the new hardship rules that was drafted by your document services provider to your day-to-day contact. We will review the amendment to ensure that our recordkeeping system aligns with the provisions outlined in the amendment and operation of your plan. Important information for 403(b) plans Please note, 403(b) plans funded by a group annuity may make QNECs, QMACs, safe harbor contributions and the associated earnings available for distribution; however, 403(b) plans funded through a custodial account may not. IRS clarification related to casualty deduction H.R. 1, the Tax Cuts and Jobs Act, modified the personal casualty deduction in section 165 of Internal Revenue Code. The change to Internal Revenue Code (Code) section 165 stated that a casualty loss deduction would only be available if the loss resulted from a federally declared disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Therefore, the safe harbor definition for immediate and financial need related to casualty loss would only allow for hardship distributions for a casualty loss for losses resulting from a federally declared disaster. The IRS

4 clarified that retroactive to January 1, 2018, hardship distributions are available to repair damage to a participant s principle residence without regard to whether or not located in a federally declared disaster area.

5 Submit 2018 Deferrals If applicable, employee contributions and any employer contributions to 457(b) plans for 2018 must be submitted by January 15, 2019, to ensure accurate deferral limit monitoring limits for a participant who is not catch-up eligible are: $18,500 if a participant in a 401(k), 403(b) or 457(b) plan $37,000 if a participant in a 401(k), 403(b) and a 457(b) plan ($18,500 to the 401(k) or 403(b) plan and $18,500 to the 457(b) plan) Other important information: A participant s deferrals to all 401(k) and 403(b) plans they participated in must be added together to determine whether he or she exceeded the $18,500 annual deferral. 457(b) plans have a separate $18,500 deferral limit. Employer contributions and employee deferrals to a 457(b) plan are added together to determine whether a participant has exceeded the 457(b) limit. Please reach out to your day-to-day contact if all contributions cannot be submitted by January 15, 2019, or if you have questions concerning the deferral limit.

6 2018 Census Submission If your plan year end is December 31, 2018, your census data is due soon. You must submit your census by the established due date to ensure testing and other year-end reporting services are completed timely. If your census is received after the due date, we will be unable to guarantee completion of your nondiscrimination testing by March 15, Actual deferral percentage (ADP) and actual contribution percentage (ACP) refunds distributed after March 15, 2019, generally are subject to a 10 percent Internal Revenue Service excise tax payable by the employer. Important: If your plan has an eligible automatic contribution arrangement (EACA), the date to complete ADP and/or ACP refunds (if applicable) may be extended to June 28, In order for a plan with an EACA to take advantage of the ability to delay refunds processing until six months after the end of the plan year without the 10 percent penalty, the EACA provisions and any amendments to the EACA provisions must apply to all employees, not just employees hired after the EACA provisions were adopted.

7 Internal Revenue Service FIRE System Annual Updates and Unavailability The Internal Revenue Service (IRS) Filing Information Returns Electronically (FIRE) system will be unavailable from December 5, 2018, through January 10, 2019, for annual updates. Any Form 8955-SSA filings submitted electronically during this window will not be processed until after January 10, If your Form 8955-SSA filing deadline is between December 5, 2018, and January 10, 2019, and your Form 8955-SSA has not been filed, we will file your Form 8955-SSA on January 10, If your Form 8955-SSA filing deadline is after January 10, 2019, and we submit your Form 8955-SSA electronically during the system downtime, the filing will be held and filed when the FIRE system becomes available. OneAmerica will not be able to complete requests to prepare amended or new Form 8955-SSA filings during the outage. Important: The FIRE system is used for Form 8955-SSA filings only. You may still submit your Form 5500 filing through the Department of Labor s EFAST2 filing system. As a reminder, your Form 5500 filing and Form 8955-SSA are due seven months after the end of the plan year or 9½ months after the end of the plan year if an extension was prepared and filed for your plan. Please see Filing Information Returns Electronically (FIRE) for more information.

8 Identifying Highly Compensated Employees The proper identification of highly compensated employees (HCEs) is critical to accurate 2018 nondiscrimination testing. An employee is considered highly compensated if he or she: Was a more than 5 percent owner of the employer (or related employer) at any time during the current year (plan year beginning in 2018) or the preceding plan year (plan year beginning in 2017) Had compensation from the employer in excess of $120,000 during the preceding year and, if the employer so elected in their adoption agreement or plan document, was in the top-paid group of the employer Other considerations when determining HCE status include: Controlled groups and affiliated service groups Family member attribution rules for more than 5 percent owners Please reach out to your day-to-day contact if you have any questions.

9 Identifying Key Employees The proper identification of key employees is critical to accurate annual determination of your plan s top heavy status. Key employees include employees (or former employees) who, at any time during the current plan year (plan year beginning in 2018), met any one of the following criteria: An officer having annual compensation greater than $175,000 A more than 5 percent owner of the employer (or related employer) A more than 1 percent owner of the employer (or related employer) with compensation in excess of $150,000 Other considerations when determining key employee status include: Determination of officers Controlled groups and affiliated service groups Ownership attribution rules for family members of owners Please reach out to your day-to-day contact if you have any questions.

10 Do Your Employees Know About The Saver s Credit? Workers who have contributed to a company-sponsored retirement plan or IRA in the past year and meet adjusted gross income requirements may be eligible for a credit up to $2,000 for single-filers and $4,000 for married couples. The credit applies to: Single filers with an adjusted income of up to $31,500 in 2018 ($32,000 in 2019) Head of a household filers with an adjusted income of up to $47,250 in 2018 ($48,000 in 2019) Married taxpayers filing jointly with an adjusted income of up to $63,000 in 2018 ($64,000 in 2019) To be eligible for the credit individuals must: Be at least age 18 Not be a full-time student Not be claimed as a dependent on another person s return Form 1040EZ filers cannot claim the credit; the 1040EZ instructions direct taxpayers to a different form if they choose to claim the credit. Taxpayers preparing their returns manually should complete Form 8880, Credit for Qualified Retirement Savings Contributions, to determine the exact credit rate and amount applicable to them. See Retirement Savings Contributions Credit (Saver s Credit) for additional information.