Retirement Plan Administration Manual

Transcription

1 Retirement Plan Administration Manual ALLIANCE BENEFIT GROUP OF ILLINOIS ADMINISTRATORS, CONSULTANTS, ACTUARIES 456 FULTON STREET, PEORIA, IL V2

2 Table of Contents Section 1 Welcome... 4 Summary of Responsibilities... 5 Section 2 Plan Administration General Overview... 6 Determining Who is a Fiduciary... 6 Glossaries of Terms... 6 Section 3 Plan Access Website Descriptions... 7 How to Obtain/Reset a Password... 7 How to Change a Participant s Address... 8 How to Add Online Beneficiaries... 8 How to Order Enrollment Books... 8 Reports Center... 9 Section 4 Document Services Document Definitions When Do You Need an Amendment? Section 5 Participant Services Enrollment and Changes Participant Website Employee Benefit Network (EBN) Participant Transaction Request Processing SmartPlan Help Desk Voice Response Unit (VRU) Section 6 Contribution & Loan Payment Processing Timeliness of Contributions & Loan Payments SchARP Instructions Contribution and Loan Payment Processing Participant Loan Requests Loan Refinance Processing Incoming Rollovers & Assisted Roll-In Program Financial & Census Information through SchARP Section 7 Quarterly Fees, Reporting & Statements Quarter-end Processing & Reporting Quarterly Fee Processing Forfeitures Page 2 of 21

3 Table of Contents (continued) Section 8 Distributions In-service Withdrawals Hardship Withdrawals Required Documentation for Loans & Hardship Withdrawals Required Minimum Distributions (RMDs) Distributions Due to Termination or Death Distributions Due to Disability Distribution Processing Timeframe Section 9 Compliance and Testing Anniversary Packages Testing Packages Compliance Calendar Page 3 of 21

4 Section 1 Welcome! As the third-party administrator and/or recordkeeper for your plan, we at Alliance Benefit Group of Illinois (ABG) are committed to working with you to ensure that your plan operates as smoothly as possible. The tools provided in this manual will help you achieve that goal, and we are just a phone call away if you have any questions. Open communication with ABG is a big key to the success of your plan. If you have any questions on the operation of your plan, we encourage you to call or us anytime. Questions can range from interpreting elections in the plan document to annual compliance filings, and even checking to see whether a change within the business will affect the plan document. This manual is your toolkit for day-to-day operation, as well as quarterly and annual tasks. If you have any questions on the information provided in this manual or something that might not be addressed in here, please do not hesitate to contact your designated Account Manager at or toll-free at We truly appreciate your business. Thank you for choosing ABG! Page 4 of 21

5 Summary of Responsibilities Client is responsible for: Compiling and proofreading completed enrollment forms from employees Keeping track of beneficiary designations Communicating payroll deductions, investment elections and match percentages to payroll provider Transmitting contributions to ABG Supplying ABG with census information for annual testing (if applicable), including employee compensation, contribution information, relevant employment dates, and hours of service Communicating termination, withdrawal and loan information to ABG via the appropriate forms Custodian is responsible for: Supplying ABG with market value of assets Investment of deposits within proper funds per direction from ABG Processing disbursements per direction from ABG 1099-R forms (if applicable) Clients Payroll Provider is responsible for: Summary of contributions Summary of loan payments Sending contribution files to ABG (one file per deposit) ABG is responsible for: Preparation of plan document * Administration * Allocation of contributions Providing direction to custodian for investment of funds Processing participant distribution requests Recordkeeping reports Participant statements IRS-required testing * Form 5500 preparation and filing * 1099-R forms (if applicable) Storage of plan data * Completed only if ABG provides third-party administrative services to the plan. Page 5 of 21

6 Section 2 Plan Administration General Overview As the administrator of your plan, you represent both the plan participants and the plan sponsor in its operation. You are responsible for ensuring the plan is carried out effectively and efficiently for the benefit of its participants and their beneficiaries. You may delegate defined technical responsibilities to a trustee, advisor (tax/legal/investment), or other designated party. You must see that the plan is administered according to federal and state regulations. That includes (but is not limited to) seeing that participant rights are protected and they are receiving the benefits specified by the terms of the plan document, and making sure the plan sponsor receives the tax advantages afforded by the adoption of a qualified plan (as applicable) and is provided with required reporting on a timely basis. While your role as plan administrator is all-encompassing, Alliance Benefit Group through the function of our Plan Services Group will provide you with the recordkeeping and administrative guidance and working tools to effectively and efficiently carry out these duties. Your dedicated Account Manager is your main point of contact for these plan-level activities, and is happy to help answer your questions and provide guidance to help you do your job well. The Participant Services team is available to work directly with participants on questions such as website information and the processing of submitted distribution requests. Determining Who is a Fiduciary A fiduciary is an individual or institution charged with acting exclusively in the interest of the plan, its participants and its beneficiaries. A fiduciary is any person who: a) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets, b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Plan or has any authority or responsibility to do so, or c) has any discretionary authority or discretionary responsibility in the administration of the Plan. It is important to identify any plan fiduciaries, as they are ultimately responsible for the plan and are held accountable if there are any issues. Glossaries of Terms Below are links to investment and plan glossaries for your reference. The base plan document is also an excellent resource for definitions of plan terms. Investment Glossary link Glossary of Retirement Plan Terms link (401khelpcenter.com) FINRA 401(k) Glossary link (updated ) Page 6 of 21

7 Section 3 Plan Access Website Descriptions The following websites (with web links) provide access to plan-level and participant-level information. Plan Sponsor Website: A one-stop site for plan, participant and fund information. Also includes links for SchARP and File Safe. You can also log in as a participant to view their account as a read-only function (no changes can be made). SchARP: Used to securely upload contribution information to match up with the deposit and process into participants accounts. Also where Loan Dashboard is located for all participants loan information (if applicable). File Safe: Used to transmit sensitive documents (e.g., quarterly reports, anniversary package information, plan documentation, etc.) securely without needing password protection on the document itself. Schwab Retirement Center (SRC): For clients who use Charles Schwab Bank as the plan s custodian. Used to generate Notice of Deposit (NOD), obtain trust statements, contribution/distribution history, etc. Participant Website ( Website for participants to log in and access their individual account information within the plan. Downloadable Forms: Website where necessary forms and information are kept. Link also available in the Plan Sponsor website under Admin Manual & Forms. How to Obtain/Reset a Password: Plan Sponsor, SchARP and SRC: Contact your Account Manager to reset and/or unlock your login. File Safe: Enter your username (always your address), click Trouble logging in? and follow the instructions to reset your password. ABG does not keep track of passwords for File Safe. Participant Website: Each participant is defaulted with their SSN as the username and the full SSN without dashes as their Password. Upon initial login if the password does not meet the requirements they will be forced to change the password, as it must be alpha numeric and no less than 9 digits. Participants can also establish a unique Alternate User ID up to 8 digits. Participants will also be required to establish a security question for their login for enhanced security. A Spanish language option is also available on the login page. Participants can go to the Participant Website or call the Help Desk at to reset their username and/or password. The Plan Administrator can access the Plan Sponsor website to unlock a participant. The Plan Administrator can call the Account Manager to reset a participant s password. Page 7 of 21

8 How to Change a Participant s Address: Plan Administrators are currently unable to change a participant s address through the website. You must either the address update to the Account Manager, or the participant can change their address by either calling the Help Desk at or logging in to the Participant Website. Once the participant has logged into the Participant Website, go to the Account Summary tab, select Participant Summary and click Change Address to update their address. For clients who use the Full Financial and Census Data (FFCD) SchARP template, the address can be updated on the spreadsheet. This is the preferred method of updating the address, as the information on the FFCD template overwrites any other changes in the recordkeeping system. How to Add Online Beneficiaries: Participants are encouraged to enter their beneficiary information through the Participant Website in addition to including it on the initial enrollment form. This allows ABG to confirm the most recent beneficiary should the need arise. The plan administrator is still responsible for ensuring beneficiaries are on file; this simply allows another tool to help ensure the most recent information is available. To add a beneficiary on the Participant Website, after logging in go to Account Summary and click on Beneficiary. The participant can view their current beneficiary information, and add or edit beneficiaries and their share percentages. Participants can make changes online anytime, 24/7. Plan administrators can log into the Plan Sponsor website and generate a Beneficiary Designation Report from the Reports Center to view who has entered their beneficiary information and identify those that need further verification (e.g., verifying primary beneficiaries who are not the spouse, missing beneficiary information, etc.). How to Order Enrollment Books: To order enrollment books, please your Account Manager with the number of books needed (available in English and Spanish), the name of the contact person, mailing address, and date needed by. Books take approximately 10 business days to arrive from the date the order is placed in our system, so make sure to allow plenty of time for printing and delivery. Overnight delivery is available upon request. The plan administrator will be asked for their overnight shipping billing information so that the cost can be charged to the client up front. The information in the enrollment books is available through the Employee Benefit Network (EBN) website. The EBN is available through the Participant website, and the Account Manager can send the Plan Administrator a web link to the plan s EBN upon request. ABG does not require original signatures on enrollment and investment election forms, so they can be submitted electronically via , fax, or uploaded to File Safe. You can work with your Account Manager to determine the best method of returning these completed forms. Page 8 of 21

9 Reports Center (Plan Sponsor Website): The Plan Sponsor Website has a Reports Center with a variety of available reports to generate. When you log in to the Plan Sponsor website, click on the Report Center tab. Any report you requested or was automatically generated by the system will be available here. Contact your Account Manager if you have questions or issues with the Report Center. To request a new report: Click on Reports I ve Requested and click the Request New Report button. Select the report you wish to generate and click Next. Select your plan by clicking the checkmark next to it, and then click the button to add it to the filter on the right-hand side. Enter the desired date range and click Submit Report. Once the report is ready, you will receive an from Automated Report Center with the address of scharpprocessing@abg .com. Click the link in the to go to the Report Center, or refresh your Report Center page if you have not logged out. o Please note if no information is available to generate a report, one will not be generated and you will receive no . The following reports are generated automatically and a notification sent to the address(es) ABG has on file. Please note that these reports are generated only if there is activity in these respective areas. If no new information is received, no report is generated. Loan Approval Notification generated as a new loan is requested by a participant (only sent if your plan requires prior approval before processing a new loan). This notifies the plan administrator that a new loan is on the Loan Dashboard waiting for approval. The approval notification will be sent daily until the loan is approved or rejected. Loan Notification generated when a new loan has been approved and submitted for processing. This notifies the plan administrator when a new loan is processing so they can gather the necessary information for starting loan payments, amortization schedule, etc. New Loan Report generated no more than 30 days prior to a new loan is scheduled to begin payments, and is sent weekly on Fridays until the loan payment start date. This helps remind the plan administrator to set up the payroll deductions to make the loan payments in a timely manner. Upcoming Loan Payoff Report generated when there are three remaining payments on a participant s loan. This helps alert the plan administrator when a loan is approaching payoff so they can stop payroll deductions and avoid excess loan payments. Deferral Change Report generated weekly on Fridays if the recordkeeping system is updated with new deferral rates (whether by the participant through the Participant Website or through the internal recordkeeping system being updated). Page 9 of 21

10 Section 4 Document Services (if applicable) ABG provides IRS-approved prototype plan documents as well as individually-designed plan documents. The below information is specific to our prototype document services. Document Definitions: The following items make up the plan document information for your plan, and are kept in File Safe: Adoption Agreement: The document where the options for your plan are selected and is your guide to explain how your plan is to be operated. Base Plan Document: The template document that includes all regulatory information for the plan. The base plan document is not customized to a particular plan, but rather offers detailed information on the different sections of the Adoption Agreement and definitions of plan terms. This is submitted to the IRS for approval, and a Favorable Determination Letter (FDL) is received to indicate IRS approval of the document under section 401 of the Internal Revenue Code. Summary Plan Description (SPD): The participant-facing document that puts all of the plan elections made in the Adoption Agreement into plain language to make it easier to understand. All participants are required to receive a copy of the SPD, which is also available through the Participant Website. The SPD distribution guidelines are available in Downloadable Forms. Loan Policy and QDRO procedures: These are plan-specific documents that dictate how loans (if offered by the plan) and QDROs (Qualified Domestic Relations Order) are to be processed. When Do You Need an Amendment? It is important to operate the plan according to the provisions chosen in the document. Failure to do so can cause problems down the line, and may result in corrections to be filed with the IRS and, in worstcase scenarios, disqualification of the plan itself. If there are any changes that may affect how the plan is currently running, it is imperative to contact your Account Manager to help determine whether an amendment is needed. They will let you know if an amendment is required and gather additional information. Please note that safe harbor plans have certain restrictions on the timing of amendments. Examples of when amendments may be needed: To change eligibility and/or entry dates for new participants To change the definition of compensation (e.g., add or remove fringe benefits or bonuses) The addition or removal of an employer contribution Inclusion or exclusion of certain employee groups (e.g., leased/temporary employees, union employees, etc.) Acquisition of a company or part of a company Selling a portion of the company Page 10 of 21

11 Section 5 Participant Services Enrollment and Changes New participants or employees who previously waived participation can be added to ABG s recordkeeping system by using the online enrollment template or Full Financial and Census Data (FFCD) template. While ABG still currently accepts paper forms for some plans, this option may eventually be phased out as paperless capabilities continue to increase. No matter the method, prior to submitting enrollment information the plan administrator must ensure that the employee has met eligibility and that the proper entry date is being used. Check the plan document for more information on eligibility and entry dates. New enrollees may enter at a later entry date if they wish; they cannot enter the plan prior to their designated entry date. Online Enrollment: Uploading new participants on the online enrollment or the FFCD template through SchARP is a quicker way to enter them into ABG s recordkeeping system and does not require paper forms. Once the new participants are entered into ABG s recordkeeping system, they can log in to the Participant Website using their SSN as their username and last four digits of their SSN as their password. They can complete their enrollment in the Participant Website by choosing their own options, or utilizing the SmartPlan function for more education on investment options and deferral rates. Paper forms (if applicable): If your plan is set up to accept paper forms, the plan-specific Participant Enrollment/Change and Investment Election forms are provided in the enrollment booklets and in the Employee Benefit Network (EBN). The new enrollee should complete the Participant Enrollment form and the most current Investment Election form, completing clearly and legibly all sections marked Required. Instructions are provided if the participant chooses not to defer into the plan at that time. The participant must sign and return the form regardless of their deferral choice. The plan administrator must check the finished forms for completion and accuracy before submitting to ABG for processing. The plan administrator returns one copy of the form to the employee, retains one for their files, and sends one to the designated Account Manager via , fax, or upload to File Safe. Current Participant Change Information: A participant can go into the Participant Website to update their information, or the Plan Administrator may send an to the Account Manager to update the recordkeeping system. If the FFCD template is used, addresses can be updated on the file which will then automatically update the recordkeeping system. There is a change option available on the enrollment form, but the first three options are the preferred method for communicating changes. Page 11 of 21

12 Terminated Participants: When a participant with an account balance terminates employment, the Plan Administrator must complete a Notice of Termination form (found in Downloadable Forms) and submit to the Account Manager for processing. This form is needed to gather information before the distribution packet is sent to the participant. Participant Website Upon initial entry into the plan, each participant is defaulted with their SSN as the username and the last four digits of the SSN as their PIN/Password. Participants may then log into the website and change both the username and the password if they wish. Both the Alternate User ID and PIN/Password may contain alpha-numeric characters. A Spanish language option is also available on the login page. If a participant is in multiple plans in the recordkeeping system, the participant may access all plans using a single login. A link titled Additional Plans will be available in the upper right-hand corner of the page, which will list all other plans tied to the participant. Options available include, but are not limited to: Summary Information: Participants can view a variety of information, including mailing and addresses, dates, investment information and a summary of balances in each source. Transaction History: Participants may view and filter any activity completed in the account including contributions, fees, distributions and gain/loss. Investment Choices: Participants may customize how future money is invested in the account by utilizing one of the plan s models or by selecting their own customized portfolio. Transfer Investments/Rebalance Account: Participants may transfer existing money in the account to one or many funds in a single transaction, or may choose to do so one fund at a time. Loan Model/Request (if applicable): If the plan allows for loans, the participants can model a loan, changing the amount and term to fit the need. The participant can then submit the loan request electronically without having to initially complete any paperwork. Beneficiary: Participants may view and update beneficiary information. If the participant is married and the primary beneficiary is not the spouse, a spousal consent form is available to print, complete and submit to the plan administrator. Education: Participants have a wealth of information available on the website regarding the importance of retirement planning, why diversification is important, and other tools. Employee Benefit Network (EBN) The EBN contains the same information found in the hard-copy enrollment books, as well as links to information for the plan s fund lineup. The EBN is accessed through the Plan Sponsor Website under the Additional Access tab Online Enrollment Book (EBN), as well as the Participant Website. Any changes made in the plan document and fund lineup are automatically updated in the EBN, including enrollment and investment election forms, Plan Highlights, and the Expense Disclosure Document (EDD). Page 12 of 21

13 Participant Transaction Request Processing Transaction requests may be initiated by participants using the Participant Website or the Voice Response Unit (VRU). If necessary, the participant can call the Help Desk for assistance initiating a web transfer. Requests are downloaded at specified intervals below: Custodian Cut-off Times Schwab Trust 11:00am and 3:00pm CT Fidelity 12:00pm and 3:00pm CT TD Ameritrade 1:00pm and 3:00pm CT Schwab B/D 1:00pm CT Matrix 3:00pm CT Mid-Atlantic Trust Company 3:00pm CT Trade batches are automatically generated through the update process and are exported to the custodian. Settlement transactions from the custodian are imported to our recordkeeping system to post the transactions to the participants. SmartPlan All plans now have access to SmartPlan, an online tool through the Participant Website to help participants make their investment elections, deferral changes and beneficiary options. A series of short videos help educate the participant so that they can make the most informed decisions. Information on SmartPlan is available through Downloadable Forms as well as the Participant Website. Help Desk ABG has a dedicated Participant Help Desk who assists participants with questions on the website, distributions, or their account in general. The Help Desk is available Monday through Friday, 7:30am- 5:00pm CT by phone at or via at participant.services@abg .com. Voice Response Unit (VRU) If a participant does not have computer access or prefers to use the phone, our automated system allows 24/7 access to their account by phone at Their assigned PIN is the last four digits of the participant s SSN. The available options through the VRU include (but not limited to): English or Spanish language Check account balances Change where future contributions are invested Obtain loan information Page 13 of 21

14 Section 6 Contribution & Loan Payment Processing Timeliness of Contributions & Loan Payments The Department of Labor (DOL) dictates that 401(k) employee contributions (deferrals and loan payments) must be deposited to the plan on the earliest date in which the contributions can reasonably be segregated from the employer s general assets. For plans with fewer than 100 participants, there is a seven-day safe harbor rule to submit these contributions. For plans with more than 100 participants, the safe harbor rule does not apply and therefore contributions must be sent in as soon as administratively feasible. You are strongly encouraged to read the piece titled Timely Deposits of Employee Contributions (available in the Downloadable Forms website) for more information on the importance of timely contributions. Please contact your designated Account Manager with any questions. SchARP Instructions SchARP is the secure website used to process contribution files and also houses the Loan Dashboard (if your plan allows for loans). ABG will have provided you with a custom SchARP spreadsheet template for use with your plan s provisions. Do not make any changes to the spreadsheet without first talking to your designated Account Manager, as it will affect how information is processed. A detailed SchARP manual is available through your Account Manager. Contribution and Loan Payment Processing Payroll files are received from the plan administrator via file upload through SchARP. Contribution files and deposits are matched up by plan, amount, and date. Trade transactions are generated and forwarded for further export to the custodian. Settlement transactions from the custodian are imported to our recordkeeping system to post the transactions to the participants accounts. ABG monitors unresolved deposits and payroll files daily, and contacts clients to resolve any outstanding issues. Loan payments are made through payroll deduction and should be included on the payroll file using a separate loan column. Loan payments can be made in exact increments of the loan repayment amount, or partial payments can be made in excess of the interest amount due. Contributions are processed within 24 hours upon receipt of the electronic file (in good order) and the corresponding deposit. If a participant receives employer contributions and no investment election form is completed, the participant will be placed into the plan s default investment election. Page 14 of 21

15 Participant Loan Requests If your plan offers loans, participants can apply for a loan online through the Participant Website. Once they log in to the Participant Website, go to Transactions and then Loan Instructions for information on modeling and applying for a loan. If your plan requires approval before the loan is processed, you will receive an alerting you that a loan is ready for approval. As the plan administrator, you are responsible for ensuring all appropriate documentation is gathered for your records. While ABG provides the amortization schedule and the electronically-signed loan documentation, you may need to gather other information depending on your plan s requirements for securing a loan. You must also ensure that loan payments start and stop through payroll deduction. In 2015 the IRS provided additional guidance on the documentation to keep in either paper or electronic format (from the IRS website): 1. Evidence of the loan application, review and approval process; 2. An executed plan loan note; 3. If applicable, documentation verifying that the loan proceeds were used to purchase or construct a primary residence; 4. Evidence of loan repayments; and 5. Evidence of collection activities associated with loans in default and the related Forms 1099-R, if applicable. If a participant does not send in loan payments for a full quarter after the last loan payment was made, their loan is considered to be in default and will be reviewed with the plan administrator to help determine whether a 1099-R is required. Please contact the Account Manager if a participant with an outstanding loan balance takes a leave of absence or other similar situation so it can be noted. notifications are sent when the following reports are created regarding loans: Loan Notification: When a new loan is requested, an with a link is sent to alert the plan administrator. From that link, log in to the Loan Dashboard to gather information to set up loan payments through payroll deduction. Loan Approval Notification (if applicable): If the plan requires administrator approval, an with a link to the Loan Dashboard is sent indicating action is required to approve the loan. When the loan is approved, another is sent to confirm the new loan (no action required). Automated Report Center: o A New Loan Report is automatically generated through the Reports center every week which summarizes any new loans taken. If no loans were taken that week, no report or will be produced. o An Upcoming Loan Payoff Report automatically generates when a loan is within three payments of being paid off. Page 15 of 21

16 Loans are processed within 4-6 business days from receipt of the request in good order, with the plan administrator s approval if applicable. This timeframe does not include mailing time or ACH processing time. Funds can be sent via ACH or check, depending on the option the participant elects. Instructions for viewing a loan, approving a loan or calculating a loan payoff in the Loan Dashboard can be found in Downloadable Forms, titled Loan Dashboard SchARP and How to Calculate a Loan Payoff Amount. Loan Refinance Processing If your plan permits loans to be refinanced, the request must be submitted via a paper form titled Loan Refinance Request and Authorization Form that can be found in Downloadable Forms. Completed paperwork can be ed or faxed to ABG. At this time there is no functionality to apply for a loan refinance through the Participant Website, but has been requested for a future website update. Incoming Rollovers & Assisted Roll-in Program If your plan permits incoming rollovers from other qualified plans and IRAs, ABG offers a program to assist employees who want to roll in accounts from other qualified plans or from an IRA in order to consolidate the funds in one account. This allows employees to simplify investment decisions and avoid multiple account fees by having all their assets in one account. Employees can call and be assigned a Consolidation Specialist to help them with the process until the assets are transferred. All incoming rollovers must complete the Rollover Form found in Downloadable Forms and be signed by the Plan Administrator. The form must be submitted to the designated Account Manager for processing. If the incoming rollover funds arrive and the form has not been sent or is missing pertinent information, ABG will not be able to process the incoming rollover until the form is received in good order. Contact your Account Manager with any questions or for additional information. Financial & Census Information through SchARP The contribution file submission template allows you to upload contribution information as well as census data each payroll period. This includes hours worked, compensation, dates, and other information needed for annual testing at each plan year end. You will receive login information, template and instructions for uploading files and troubleshooting issues during the conversion process. Should you have any questions or issues with the website, please contact your Account Manager. Page 16 of 21

17 Section 7 Quarterly Fees, Reporting & Statements Quarter-end Processing & Reporting At the close of each plan year quarter, data is compiled on a cash basis. Quarterly participant statements are generated and either mailed directly to the participant s home address or delivered electronically. If a participant has opted for e-statements, they will receive a notification alerting them that their statement is available to view. Within ten business days following the end of every quarter, ABG will provide the plan sponsor/administrator with the following items via File Safe: o Quarterly Report offers a per-participant breakdown of activity during the prior quarter, along with a plan-level breakdown by source and by fund. o Retirement Plan Summary offers additional information at the plan level, including deferral rates, investments, etc. The reports uploaded to File Safe are saved under Plan_ReportsYEARQuarter. These are kept in File Safe permanently (if there is any change to this practice, ABG will notify you). Quarterly Fee Processing Plan fees are calculated on a quarterly basis in arrears according to the fee schedule provided in the ABG Service Agreement. An invoice is generated and sent to the plan sponsor/administrator and is eith billed to the plan sponsor or deducted from plan assets. Your Account Manager will notify you of any special services that must be completed for an additional fee and include information on what is involved with that service. Forfeitures Forfeitures are accrued when a participant terminates and takes a lump sum distribution/rollover but is not 100% vested in the plan. The forfeitures are allocated by plan year and used according to the provisions selected in the plan document. You may access the forfeiture account through the Plan Sponsor website by clicking Help a Participant, entering zz in the Last Name field and clicking the Search button. You may also contact your Account Manager to find out about any available forfeitures and their usage. Page 17 of 21

18 Section 8 Distributions Depending on the provisions elected in your plan s document, participants may be allowed to take a withdrawal if they meet certain criteria. Forms for distributions while a participant is still active in the plan are available in the Downloadable Forms website. Please review these forms thoroughly before submitting them for processing to ensure all applicable fields have been completed, including all applicable signatures and dates. Forms can either be faxed to ABG at (309) , or ed directly to the Account Manager for processing. Contact your Account Manager with any questions on whether a field must be completed (e.g., spousal consent). In-service Withdrawals If the plan allows, active participants who meet the requirements set forth in the plan document can take an in-service withdrawal while still active in the plan. The funds can be sent to the participant via ACH or check, and a rollover option is available should they want to roll their funds into an IRA. If the participant elects a cash distribution, they will have 20% mandatory federal withholding applied, plus state tax withholding if your state requires it. Additional federal withholding can be processed upon written request by the participant via the IRS Form W-4P. Hardship Withdrawals If the plan allows, a participant may take a safe harbor hardship withdrawal from the plan if they meet certain criteria mandated by the IRS: Extraordinary medical expenses previously incurred for the participant, spouse, or dependants. Purchase of the participant s primary residence (excluding mortgage payments). Payment of tuition for the next 12 months of post-secondary education for the participant, spouse or dependant. Expenditures to prevent eviction from the participant s residence or foreclosure of the participant s mortgage on the participant s primary residence. Funeral expenses of parents, spouse, children, or dependants. Certain expenses relating to the repair of damage to the participant s principal residence that would qualify for the casualty deduction (e.g., hurricane or flood damage). The participant must cease making deferrals for a minimum of six months after taking the distribution. The plan administrator should work with the payroll provider to ensure deferrals are stopped as soon as administratively feasible after the request is sent for processing. Once the suspension period is complete, the plan administrator should ensure that deferrals start up again at the original rate. A hardship withdrawal is not eligible to be rolled over, so 10% federal tax withholding is applied to the distribution unless otherwise elected on an IRS Form W-4P. The funds can be sent to the participant via ACH or check. Page 18 of 21

19 Required Documentation for Loans & Hardship Withdrawals In 2015, the IRS issued additional guidance on what documentation is required to prove the immediate and heavy financial need. Self-certification by the participant is not enough; the plan administrator must be able to produce documentation proving the need for a hardship withdrawal if requested. The following records must be kept in paper or electronic format (from the IRS website): 1. Documentation of the hardship request, review and approval; 2. Financial information and documentation that substantiates the employee s immediate and heavy financial need; 3. Documentation to support that the hardship distribution was properly made in accordance with the applicable plan provisions and the Internal Revenue Code; and 4. Proof of the actual distribution made and related Forms 1099-R. Required Minimum Distributions (RMDs) A participant who turns age 70½ during the calendar year is required to start taking a Required Minimum Distribution from their account. However, if they are still an active plan participant and not a more-than 5% owner of the company, they can defer their RMD until they do terminate employment. ABG will send you a report each year to ensure we have accurate information on those participants who are at least age 70½ during the calendar year. We will then send out RMD packages to those eligible participants, and work with them directly to ensure their RMD is taken when required. Once a participant starts taking their RMD, they cannot stop future RMD payments. Distributions Due to Termination or Death If a participant terminates due to leaving employment or due to death, a Notice of Employee Termination form must be completed and submitted to ABG. The form can be found on the Downloadable Forms website. Once we receive this form, we will send out a distribution package to the terminated participant to provide them with their options for taking a distribution or rolling their funds to another qualified plan or IRA. If the participant s balance is over $5,000, they can leave it in the plan as long as they wish. If it is under $5,000 (or as determined in the plan document) they can be forced out of the plan if we do not receive distribution paperwork from the participant within 60 days of sending it out. Their balance would then be forced out of the plan and into a Safe Harbor IRA in the participant s name at the rollover provider selected per the signed agreement at the time of conversion. In the case of a deceased participant, you must send in proof of the beneficiary(ies) in the form of the most recent enrollment form or beneficiary change form. The employer must provide the beneficiary information to ABG, along with their contact information. We will then send distribution packages as appropriate. Page 19 of 21

20 Distribution Due to Disability Please contact your Account Manager if you have a situation where a participant becomes totally and permanently disabled and must take a distribution. Distribution Processing Timeframe Distributions are processed within 4-6 business days upon receipt of the appropriate paperwork in good order. This timeframe does not include mailing time or ACH processing time. Missing, incorrect or illegible information can delay the disbursement of funds. If ACH is chosen as the disbursement option and the instructions are found to be incorrect, a check will be sent instead to the address on record. Depending on the type of distribution, the plan administrator or participant may be contacted for additional information or for clarification of the data provided. Page 20 of 21

21 Section 9 Compliance & Testing (if applicable) All qualified plans are required to go through annual compliance testing to ensure that your plan is operating according the provisions selected in the document, and that it is not being discriminatory against any one group within the plan. ABG will keep track of when testing is due and any other compliance filings, and let the plan administrator know when these are due. Anniversary Packages: At the end of your plan year, we will send you an anniversary package consisting of a questionnaire and census for your completion in order to complete testing. For plans using full census and contribution template for SchARP uploads, we will send a completed census for which you just need to check to verify it matches your records. The anniversary package is uploaded to File Safe along with a cover letter that provides the deadline for submitting the completed package to ABG in good order. Any questions on the information being requested can be directed to the plan s Account Manager. **Please note: putting termination dates and/or rehire dates on the census does not replace the need to inform the Account Manager. Please also send in a Notice of Termination form (found in Downloadable Forms) for terminated employees or the Account Manager to inform them of a rehired employee. Testing Packages: Once we receive the completed information, we will complete testing and send you a PDF of the testing package. If the plan fails testing, we will provide you with instructions for correcting the failure (e.g., corrective distributions, top-heavy contributions, etc.). The testing results will be uploaded to File Safe and prior years testing information will continue to be stored in File Safe. Depending on your plan s size and the provisions selected, additional compliance tasks may need to be completed. We will keep you informed of what needs to happen and the timeframe for completion. 5500: ABG will also complete and submit a Form 5500 for your plan each year, and send it to the plan administrator for electronic signature. The Form 5500 must be electronically signed and filed with the DOL no later than seven and a half months after the close of the plan year. There is an option to extend the filing an additional three months if needed. Compliance Calendar: A compliance calendar is available in the Downloadable Forms website. This is a useful guide to see when the various filings must be completed for a calendar plan year. Page 21 of 21