Compliance Checklist 2009

Transcription

1 Compliance Checklist 2009 Fo Govenmental and Nonelecting Chuch Plans, Non-ERISA 403(b) Pogams, 457 Plans, and othe Nonqualified Executive Benefit Plans that ae not subject to ERISA.

2 As a etiement plan sponso, you know how impotant it is to comply with the eve-changing epoting and disclosue equiements mandated by the fedeal govenment. You also know how confusing it can be. Compliance Checklist fo 2009 Dea Client, As you povide of etiement sevices, we ae always looking fo ways we can make you job easie. That is why we ae pleased to povide you with ou Compliance Checklist fo 2009, offeed to Pudential Retiement clients by ou Regulatoy & Consulting Sevices depatment. The Checklist incopoates equiements fo Govenmental and Nonelecting Chuch Plans, Non-ERISA 403(b) Pogams, 457 Plans, and Nonqualified Executive Benefit Plans, and povides infomation on the mateials that you will need to file, filing due dates, and agencies to which the filings should be made. In addition, we ve identified how Pudential Retiement can help you complete each task, so you can est assued you have what you need to meet the latest govenment filing equiements. We ae confident that you will find this Checklist to be a valuable efeence tool. If you have any questions on any of the items coveed in the Checklist, o if you would like additional infomation on how Pudential Retiement can help you meet these equiements, please contact you Pudential Retiement epesentative. Sinceely, Michael L. Taicani Vice Pesident, Regulatoy & Consulting Sevices Pudential Retiement

3 How to use this Checklist We ve designed this Checklist as a quick glance esouce to help you meet plan epoting and disclosue equiements fo plans that ae not subject to the epoting and disclosue equiements of ERISA. This easy-to-follow Checklist should help you povide timely and complete infomation to individuals and appopiate govenment agencies. We suggest you keep you Checklist in a convenient place so you can efe to it wheneve you may need to take specific action. Fo you convenience, we ve divided it into the following epoting categoies: Paticipants & Beneficiaies Pages 3 though 7; and Intenal Revenue Sevice (IRS) Pages 8 though 10. Each of the categoies contains five sections: Status; Plan; Item; Action/Suppot; and When Due. The Status column is a convenient way to monito the activity fo each item that applies to you plan o pogam. The Plan column indicates whethe the item applies to qualified govenmental o nonelecting chuch defined benefit ( DB ) plans o defined contibution ( DC ) plans, non-erisa 403(b) pogams ( 403(b) ), Section 457(b) plans ( 457 ), o unfunded nonqualified plans ( NQ ). Thoughout this document, we will collectively efe to these as plans. Remembe, if you sponso multiple plans, these equiements apply sepaately to each plan. The Action/Suppot column lists what must be completed fo each item and descibes Pudential Retiement s ole in suppoting the tasks. In addition, this column indicates how these actions must be pefomed. We suggest you stat by eviewing the items in each section that apply to you type of plan(s). The mandatoy annual (o moe fequent) ecuing items appea in bold within each section. You ae equied by law to act on these items if they apply to you plan. Next to the applicable items, place a checkmak in the box povided in the Status column. Then look in the When Due column to detemine you deadline and pencil it in next to Action Date. Thee ae two categoies of event-diven items, which equie action only unde cetain cicumstances. The fist categoy includes items that may apply to you plan, such as a change in you plan s vesting schedule. Fo these you can fill in the Action Date. The second categoy of event-diven items coves those that apply to individuals in you plan. Because these can occu fequently each yea, an Action Date is not included, but you may find it useful to jot down notes in the Status column. This edition of Pudential s Compliance Checklist addesses those epoting and disclosue equiements fo plans not subject to ERISA. In addition, it indicates what you need to povide o file and when. Finally, the action/suppot indicates how Pudential woks with you to complete each epoting and disclosue task. A sepaate edition of Pudential s Compliance Checklist addesses epoting and disclosue equiements fo plans that ae subject to ERISA Title I. The infomation pesented hee eflects epoting and disclosue equiements in effect as of Januay 1, Since egulations ae always subject to change, you should consult you tax adviso fo updates. This Compliance Checklist and othe impotant compliance publications, such as Pudential s Pension Analyst may be found on Pudential s website at The When Due column specifies the deadline o completion time fame fo each item. Pudential Retiement cannot povide tax o legal advice. Plan sponsos should consult thei attoneys about the application of any law to thei etiement plans. 1

4 Special note about nonqualified plan epoting equiements In geneal, a nonqualified top-hat plan is subject to ERISA epoting equiements, including the equiement to file Fom 5500 annually. Howeve, when a top-hat plan is unfunded (i.e., the geneal assets of the employe ae used as the sole souce to povide benefits), the plan sponso may epot the following infomation diectly to the DOL, instead of filing Fom 5500: 1. The sponsoing employe s name, addess, and employe identification numbe (EIN); 2. A declaation that the employe maintains the plan pimaily to povide nonqualified defeed compensation to a select goup of management o highly compensated employees; and 3. A statement of the numbe of top-hat plans and the numbe of employees paticipating in each such plan. This statement must be filed within 120 days of the plan inception date. It should be sent to: Top-Hat Plan Exemption Employee Benefits Secuity Administation Room N-1513 U.S. Depatment of Labo 200 Constitution Avenue, N.W. Washington, DC If the infomation is not povided within this time fame, the plan sponso will be equied to distibute Summay Plan Desciptions and to comply with all ERISA Title I epoting and disclosue equiements, including the annual filing of Fom

5 Paticipants & beneficiaies Status Plan Item Action/Suppot When Due DB DC 403(b) 457 NQ Fom 1099-R to epot distibutions, including diect olloves fom qualified plans, 403(b) pogams, and 457 plans, o fom a nonqualified plan to a paticipant s beneficiay. Pudential issues Foms 1099-R to paticipants and beneficiaies in plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Januay 31 of the yea following the calenda yea in which the distibution was made. DB DC 403(b) 457 NQ Fom 1042-S to epot distibutions made to cetain nonesident aliens. Pudential issues Foms 1042-S to paticipants and beneficiaies in plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Mach 15 of the yea following the calenda yea in which the distibution was made. NQ Fom W-2 to epot distibutions made to paticipants fom nonqualified plans. Pudential issues Foms W-2 to paticipants in plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Januay 31 of the yea following the calenda yea in which the distibution was made. DC 403(b) 457* Eligible Automatic Contibution Aangement Notice (EACA). Plan Sponsos of automatic enollment plans that meet the eligible automatic contibution aangement equiements (to pemit penalty-fee distibution of accidental automatic defeals) must povide employees with a notice that descibes the level of contibution which will be made if the employee does not make an affimative election, the employee s ight to elect a diffeent pecentage, and how contibutions will be invested in absence of an investment election. If applicable, the notice must also descibe the ability fo the employee to eceive a withdawal of accidental defeals and the pocedues to elect such a withdawal. Fo moe infomation egading additional items that must be included in the EACA Notice, please see the May 2009 Pudential s Pension Analyst titled, IRS povides final guidance on automatic enollment plan designs. Within a easonable peiod of time befoe the employee becomes eligible and within a easonable time befoe the beginning of each plan yea. At least 30 days and no moe than 90 days befoe the beginning of the plan yea is deemed easonable. * Applies to govenmental 457(b) plans only. 3

6 Paticipants & beneficiaies (continued) Status Plan Item Action/Suppot When Due DB DC Summay Plan Desciption (SPD) o booklet (contains desciptive infomation concening plan povisions and administation). Pudential dafts an employee booklet fo clients who have elected to use ou Plan Document Sevices. No specific due date. Govenmental and nonelecting chuch plans ae not subject to ERISA s paticipant disclosue equiements. Howeve, Plan Sponsos must tell employees about the plan and any changes made to the plan fo the plan to be qualified. Instead of poviding an official SPD, Plan Sponsos may: give each employee a copy of the plan document; give each employee a booklet summaizing the plan; o post a notice about the plan on a bulletin boad. Retiement systems of states that have adopted the Unifom Management of Public Employee Retiement Systems Act of 1997 (UMPERSA) must include cetain specific infomation in an SPD. DB DC Notice to inteested paties of application fo initial qualification o fo amendment of plan unde Intenal Revenue Code. Plan Sponsos geneally must povide this notice to eligible employees and othe employees woking at the same pincipal place of employment. Pudential pepaes a sample of this notice fo clients who have elected ou Plan Document Sevices, if applicable. If seeking a detemination lette, the plan must povide notice to inteested paties. The notice must be povided no less than 10 and no moe than 24 days befoe the application fo the detemination lette is mailed. 4

7 Paticipants & beneficiaies (continued) Status Plan Item Action/Suppot When Due DB DC 403(b)* 457 Requied Minimum Distibutions (RMD). DB DC Witten explanation of peetiement suvivo annuity and joint and suvivo annuity. Plan Sponsos ae esponsible fo detemining which paticipants must eceive RMDs. Fo defined benefit clients, Pudential publishes a special annual issue of Pudential s Pension Analyst, which contains updated infomation on the ules. Plan Sponsos must submit the appopiate foms to initiate distibutions. Pudential sends a listing of paticipants who ae/will be age 70½ o olde duing the upcoming calenda yea to defined contibution, 403(b), and 457 clients who use ou Recodkeeping Sevice. Afte Plan Sponsos eview the list and submit changes o evisions, Pudential sends infomation diectly to affected paticipants to initiate the equied distibutions. Fo distibution calenda yea 2009, paticipants and beneficiaies in defined contibution plans, including 403(b) plans and govenmental 457(b) ae not equied to eceive RMDs. Paticipants and beneficiaies in nongovenmental 457(b) plans must eceive RMDs as scheduled in As equied by the plan document, Plan Sponsos must povide these notices to paticipants and thei spouses. Pudential has published a Pension Analyst on Suvivo Benefit Rules fo Defined Benefit Plans (June 1994) and fo Defined Contibution Plans (August 1999). The fist distibution must be made by Apil 1 following the calenda yea in which the paticipant eties o tuns 70½, whicheve comes late. Special Note: A paticipant who signed an election befoe Januay 1, 1984 to emain unde pe-tefra ules can delay payments accoding to that election. Even though qualified govenmental and nonelecting chuch plans ae not subject to ERISA s suvivo benefit equiement, some Plan Sponsos choose to povide peetiement suvivo o joint and suvivo benefits. If you plan document contains paticipant notification equiements, you must administe it accoding to those equiements fo the plan to emain qualified. Howeve, you may emove those povisions fom the plan at any time by adopting an appopiate plan amendment. * Fo 403(b) pogams, RMD equiements apply only to the potion of the account balance accued afte Decembe 31, Fo the potion of the account balance that accued befoe Januay 1, 1987, RMD equiements apply beginning in the yea in which the employee tuns age 75, egadless of employment status. 5

8 Paticipants & beneficiaies (continued) Status Plan Item Action/Suppot When Due DB DC 403(b) 457* Special Tax Notice Regading Plan Payments (Section 402(f) Notice). DB DC 403(b) 457* Automatic Rollove Notice fo plans with mandatoy distibutions exceeding $1,000. Plan Sponsos must povide this notice to paticipants and beneficiaies. Pudential povides this notice to paticipants in defined contibution plans who equest distibutions though Pudential s toll-fee telephone numbe sevice, Paticipant Website, Pesonal Retiement Sevices, o the Diect Sevice Option. Fo defined benefit plans that use Pudential Retiement s Outsoucing Sevices, Pudential povides this notice to paticipants. Pudential will continue to apply the notification peiod cuently used by the plan, unless the Plan Sponso notifies Pudential to change this pocedue. Pudential s Pension Analyst fom Januay 2002 contains the IRS safe habo notice. Fo defined contibution plans that use Pudential Retiement s Distibution Options Lette, Pudential will povide this notice to paticipants. Also, fo defined benefit plans that use Pudential Retiement s Outsoucing Sevices, Pudential will povide this notice to paticipants. No less than 30 days and no moe than 180 days befoe the distibution date. Paticipants can waive the 30-day waiting peiod if: (a) the paticipant is given at least 30 days afte eceiving the notice to make a decision to diectly oll ove the payment; and (b) the plan administato clealy lets the paticipant know that he/she has at least 30 days in which to make a decision; and (c) the paticipant s spouse does not have to consent to the distibution. Pio to the date the mandatoy distibution is made. * Item applies to govenmental 457(b) plans. Distibutions fom non-govenmental 457(b) plans ae not eligible fo ollove. 6

9 Paticipants & beneficiaies (continued) Status Plan Item Action/Suppot When Due DB DC 403(b) 457* Notice of ight to elect not to have fedeal income tax withheld fom distibutions othe than eligible ollove distibutions. DB DC 403(b) 457 Statements to new employees not coveed by Social Secuity. 403(b) Effective oppotunity to make o change elective defeals. DB Notice of ight to supply actual eanings histoy unde plans using estimated wages to detemine Social Secuity offset in benefit fomula. Plan Sponsos must povide this notice to paticipants and beneficiaies taking distibutions. State and local govenmental employes ae equied to povide a statement to employees hied on o afte Januay 1, 2005, whose jobs ae not coveed by Social Secuity. A copy of the statement with the employee s signatue must be sent to the pension-paying agency. Pudential s Compliance Bulletin fom Mach 2005 discusses this equiement. Plan Sponsos must povide employees with an effective oppotunity to make o change a cash o defeed election. Pudential can povide a sample template that can be used fo this pupose. Plan Sponsos must povide this notice to paticipants, if applicable. Peiodic payment: no ealie than six months befoe and no late than with the fist payment. Notice of the ight, must theeafte be given, to make o evoke an existing election once each calenda yea at appoximately the same time. Nonpeiodic payment: no ealie than six months befoe the distibution but within easonable time fo payee to make a decision and notify paye of election choice befoe distibution is made. Note: U.S. citizens living aboad with no pemanent esident addess in the U.S. cannot elect out of fedeal tax withholding. Special ules may apply to nonesident aliens. Employes must give the statement to an employee befoe he o she is hied. At least once duing each plan yea. This is due: (a) with SPD, if distibuted; and (b) upon sepaation fom sevice. * Item applies to govenmental 457(b) plans. Distibutions fom non-govenmental 457(b) plans ae not eligible fo ollove. 7

10 Intenal Revenue Sevice Status Plan Item Action/Suppot When Due DB DC 403(b) 457 NQ Fom 1099-R to epot distibutions including diect olloves fom qualified plans, 403(b) pogams, and 457 plans o fom a nonqualified plan to a paticipant s beneficiay. Pudential files Fom 1099-R with the IRS fo plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Febuay 28 of the yea following the calenda yea in which the distibution was made. If filing electonically, the due date is Mach 31 of the yea following the yea in which the distibution was made. A 30-day extension to eithe filing deadline may be equested by filing Fom 8809 by the applicable filing due date. DB DC 403(b) 457 NQ Fom 945 to epot income tax withheld fom distibutions made fom qualified plans, 403(b) pogams, 457 plans, and fom nonqualified plans to paticipants beneficiaies. Pudential files Fom 945 with the IRS fo plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Januay 31 of the yea following the calenda yea in which the distibutions wee made. This filing deadline can be extended by 10 days if tax payments wee made on time and in full. DB DC 403(b) 457 NQ Fom 1042-S to epot distibutions made to cetain nonesident aliens. Pudential files Fom 1042-S with the IRS fo plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Mach 15 of the yea following the calenda yea in which the distibution was made. A 30-day extension may be equested by filing Fom 8809 by this due date. DB DC 403(b) 457 NQ Fom 1042 to epot income tax withheld fom distibutions made to cetain nonesident aliens. Pudential files Fom 1042 with the IRS fo plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Mach 15 of the yea following the calenda yea in which the distibution was made. The filing deadline can be extended up to 90 days by filing Fom Howeve, the filing of Fom 2758 does not extend the time fo the payment of income tax. NQ Fom W-2 to epot distibutions made to paticipants fom nonqualified plans. Pudential files Fom W-2 fo plans whose Plan Sponsos have elected to use ou Benefit Payment Sevices. Febuay 28 of the yea following the calenda yea in which the distibution was made. If filing electonically, the due date is Mach 31 of the yea following the yea in which the distibution was made. A 30-day extension to eithe filing deadline may be equested by filing Fom 8809 by the applicable filing due date. 8

11 Intenal Revenue Sevice (continued) Status Plan Item Action/Suppot When Due NQ Fom 941 to epot income tax withheld fom distibutions made to paticipants fom nonqualified plans. Pudential files Fom 941 with the IRS fo plans whose Plan Sponsos have elected to use Benefit Payment Sevices. Last day of the month following the end of each calenda quate in which distibutions wee made. This filing deadline can be extended by 10 days if tax payments wee made on time and in full. DC 403(b) 457 Coection of Excesses: (1) Elective Defeal Limit Fo 2008: $15,500 Fo 2009: $16,500 Plan Sponsos ae esponsible fo monitoing the defeal limit. Geneally, Plan Sponsos povide Pudential with diection to distibute excess defeals. If pemitted by the plan, catch-up eligible paticipants may have excess defeals eclassified as catch-up contibutions up to the limit fo the specified yea (the age 50 catch-up limit is $5,000 fo 2008; $5,500 fo 2009). Calenda-yea test peiod must distibute no late than Apil 15 of calenda yea following the yea in which excess defeals occued. Govenmental 457(b) plans must distibute the excess defeals as soon as administatively pacticable. Unde a 403(b) pogam, cetain employees of an eligible oganization may make additional defeals unde a 15-yea catch-up option. Fo a 457(b) plan, the basic annual limit fo 2009 is the lesse of $16,500, o 100% of the paticipant s includible compensation. Unde a 457(b) plan, cetain employees may also be eligible fo a special Section 457 catch-up limit. DC 403(b) (2) Excess Annual Additions - (Fo 2009: the lesse of: 100% of compensation o $49,000.) Plan Sponsos ae esponsible fo monitoing Code Section 415 Limits. Plan Sponsos must povide Pudential with diection to distibute excess annual additions. Limitation-yea test peiod. Coection methods may include efunding to paticipants, o emoving fom paticipants accounts and using as contibution cedit. Coections should be completed as soon as possible. 9

12 Intenal Revenue Sevice (continued) Status Plan Item Action/Suppot When Due DB DC Advance Detemination (1) Fom 5300 to equest a detemination lette fo qualification of a plan and the exempt status of any elated tust, and Schedule Q (nonelecting chuch plans only) to elate the manne in which the plan satisfies cetain nondiscimination equiements. The filing of Schedule Q is optional. Plan Sponsos must file the fom with the IRS. Pudential pepaes a completed fom fo defined benefit Plan Sponsos who elect ou Plan Document Sevices. Pudential povides eithe a completed fom o an instuctional package fo defined contibution clients who elect ou Plan Document Sevices. Even though the filing of Schedule Q is not equied, Plan Sponsos of nonelecting chuch plans may choose to submit it with the Fom 5300 seies to boaden the scope of a detemination lette. Befoe the end of the plan s egula, five-yea emedial amendment cycle, geneally detemined by the last digit of the employe s EIN. The fist EGTRRA emedial amendment cycle ended on Januay 31, Fo plans whee the last digit of the employe s EIN ends in a 4 o 9, the EGTRRA emedial amendment cycle ends on Januay 31, The deadline fo govenmental plans is Januay 31, 2009, unless the Plan Sponso chooses to file instead between Febuay 1, 2010 and Januay 31, Fo moe infomation on emedial amendment cycles, see the IRS s Deteminations web page at: pactitione/aticle/0,,id=162397,00.html. Receipt of an advance detemination lette allows an employe to make contibutions to the etiement plan with the knowledge that investment eanings on plan assets ae not taxable until distibuted and paticipants will not be taxed on thei benefits until distibuted. DB DC (2) Fom 5310 to apply fo a detemination upon plan temination unde Code Section 401(a). Nonelecting chuch plans have the option to file Schedule Q with Fom 5310 to elate the manne in which the plan satisfies cetain nondiscimination equiements. Govenmental plans do not file Schedule Q. Plan Sponsos should file these foms with the IRS. The late of: (i) one yea fom the effective date of the temination; o (ii) one yea fom the date on which the action teminating the plan is adopted. Howeve, in no event can the application be filed late than 12 months fom the date of distibution of substantially all plan assets in connection with the temination of the plan. DB DC (3) Fom 8717 (Use Fee) to be attached to detemination lette filing. Plan Sponsos must file this fom along with Fom 5300 o Fom 5310 with the IRS. See infomation unde Advance Detemination. 10

13 Notes

14 280 Tumbull Steet Hatfod, CT Pension Analyst by Pudential Retiement The Pension Analyst is published by Pudential Retiement, a Pudential Financial business, to povide clients with infomation on cuent legislation and egulatoy developments affecting qualified etiement plans. This publication is distibuted with the undestanding that Pudential Retiement is not endeing legal advice. Plan Sponsos should consult thei attoneys about the application of any law to thei etiement plans. Pudential Retiement, Pudential Financial, PRU, Pudential and the Rock logo ae egisteed sevice maks of The Pudential Insuance Company of Ameica, Newak, NJ and its affiliates. Pudential Retiement is a Pudential Financial business. June 2009 Compliance Checklist 2009 Pudential s Pension Analyst Pudential Retiement 2009 The Pudential Insuance Company of Ameica, all ights eseved. RSGD217 Pinted 06/2009