Plan Administration Manual

Transcription

1 Plan Administration Manual P a g e 1

2 Thank you for choosing American United Life Insurance Company (AUL), a OneAmerica company, as the funding vehicle and administrative services provider for your retirement plan. We are happy to have this opportunity to thank you for your continued business and trust this material will assist you in the administration of your plan. Note: This material cannot address every situation, and AUL cannot know all aspects of your business structure and operation or your employment practices. As a result, you should consult your tax advisor, legal counsel and/or benefits advisor on issues, questions or concerns specific to how this material fits your circumstances, the design of your plan and/or the structure of your business. Please contact us if you have any questions about this material. P a g e 2

3 Table of Contents Plan Administration... 5 Plan Administration Overview... 5 Contributions Distributions Fidelity Bonds Loan Administration Loan Provisions Loan Origination and Repayments Defaulting Loans Additional Information Reports Confirmations esponsor Financial Details esponsor - Loan Center esponsor Participant Data Plan Sponsor Online Support OneAmerica.com esponsor Participant Support OneAmerica.com Account Services Participant Service Center Enrollments Investment Elections (c) Compliance Transfers Transfer Limits and Restrictions Redemption Fees P a g e 3

4 Reference guide Frequently used Internal Revenue Code section references, acronyms and abbreviations Internal Revenue Code section Refers to Description used in this material reference 401(k) Actual Deferral Percentage test ADP test 401(m) Actual Contribution Percentage test ACP test 414(s) Compensation Ratio test Compensation test 415 Annual Additions Limit test or 415 test Annual additions limit test 410(b) Minimum Coverage test Coverage test 416 Top heavy determination Top heavy determination 402(g) 401(k) and 403(b) Deferral limit Deferral limit or 402(g) deferral limit Reference Abbreviation or acronym Automatic Contribution Arrangement ACA Date of Birth DOB Date of Eligibility DOE Date of Hire DOH Date of Termination DOT Department of Labor DOL Eligible Automatic Contribution Arrangement EACA Economic Growth and Tax Relief Reconciliation Act of 2001 EGTRRA The Employee Retirement Income Security Act of 1974 ERISA Highly Compensated Employee HCE Internal Revenue Code Code or IRC Internal Revenue Service IRS Non-Highly Compensated Employee NHCE Qualified Automatic Contribution Arrangement QACA Qualified Pre-Retirement Survivor Annuity QPSA Qualified Joint Survivor Annuity QJSA Qualified Non-Elective Contribution QNEC Qualified Matching Contribution QMAC Required Minimum Distribution RMD Section Summary Annual Report SAR Summary of Material Modification SMM Summary Plan Description SPD P a g e 4

5 Plan Administration Plan Administration Overview The information in this section is meant to be a high-level overview of roles and responsibilities and is not intended to be a comprehensive listing. Please use this material as a guide to direct you to where more detailed information can be found. Q: What are my overall responsibilities as Plan Administrator? A: As Plan Administrator, you are responsible for the day-to-day operations of the plan which includes: Ensuring newly eligible employees are enrolled Submitting contributions Approving and verifying distributions Completing and transmitting census data Distributing notices and reports (e.g., Participant Fee Disclosure document, Summary Annual Report, Summary Plan Description, safe harbor, etc.,) to participants Filing Form 5500 and related schedules or the Form 5500-SF Filing Form 8955-SSA (if applicable) Following fiduciary guidelines and standards Q: What is involved with enrolling a new employee? A: To enroll a new employee you should: Submit new employee information via our secure esponsor website at so that you will receive notification of an approaching eligibility date via the Plan Entry Report or the Contribution report from the Payroll Feedback file. Provide education and investment materials, a Participant Fee Disclosure document, a Summary Plan Description (SPD) and any other applicable notices (e.g., qualified default investment election, safe harbor, automatic contribution arrangement, etc.,) Update your payroll system. Retain a completed Beneficiary Designation form if not using our electronic beneficiary designation tracking. Q: How does AUL assist with enrollments? A: AUL assists with the enrollment process via our website at Here are some of the materials and links available to you and your participants: Plan Entry report can be found on esponsor under the Reports tab. This report indicates individuals with an approaching eligibility date. Payroll Feedback File can be found on esponsor under the Reports tab. This file is a comprehensive report that can be downloaded for your use for both contributions and loans. One Day is Today can be found in Account Services and OneAmerica.com. It contains links to a wealth of planning and education material related to investments. Various forms can be found on esponsor in the Administration tab under Administrative Forms. Participant Fee Disclosure documents can be found in Important Documents under the Quick Links section. Participants may access the document in Account Services under the My Plan tab. P a g e 5

6 Participants and sponsors can add, change and view beneficiary designations via our secure Account Services and esponsor websites. Sponsors can view participant beneficiary information under the Participant Data tab and Plan Reports tab. For more information materials and links available on our website, please see Plan Sponsor Online Support and Participant Support. Q: What do I need to know about submitting contributions? A: Best practices in terms of submitting contributions include: Submit contributions timely. Plans with fewer than 100 participants may take advantage of the DOL s seven-day safe harbor period for remitting employee contributions (including loan repayments). There is no safe harbor period for large plans (i.e., plans with more than 100 participants). Submit employer match contributions only for participants who have earned them. If your plan has an hour and/or last day requirement, only submit matching contributions after the participant has met those requirements. Submit employer match according to your plan document and retirement plan law provisions. For example, if your plan makes a safe harbor matching contribution with a match computation period shorter than the plan year, the IRS safe harbor regulations require that the contribution be made by the end of the quarter following the quarter for which the match is being made. Review contribution detail information on esponsor to confirm receipt and allocation of contributions. You can generate a contribution detail report under the Financial Details tab on esponsor. See Contributions, Reports and Plan Sponsor Online Support for additional information. Q: How does AUL assist with contributions? A: AUL assists by: Providing a tool for you to create reports for a selected period of time listing contribution detail and contributions by category. Calculating employer and match allocations (if contracted). See Contributions, Reports and Plan Sponsor Online Support for additional information. Q: What do I need to know about approving and verifying distributions? A: In general, you need to: Determine which types of distributions are available to participants under your plan. Obtain appropriate Spousal Consent and/or Qualified Joint & Survivor Annuity Waiver forms (if applicable) and retain them for your permanent files. Direct participants to call the Distribution Assistance Group at Verify the participant s signature (and spousal consent if required) and sign as Plan Administrator. Additional information about distributions, waivers and forms can be found on the secure esponsor site at Q: How does AUL assist with distributions? A: AUL assists by: Offering distribution assistance through the Participant Service Center. They will complete the appropriate distribution forms and will mail to the participant a signature ready form along with the Special Tax Notice Regarding Payments and, if applicable, any Spousal Consent and/or Qualified Joint & Survivor Annuity Waiver forms. Processing the distribution upon receipt of the distribution form that contains both the participant s and your signature. P a g e 6

7 Providing Mandatory Cash-Out (MCO) assistance via the MCO Center on our secure esponsor website. Providing a tool for you to create a Distribution Detail report on esponsor for a selected period of time. See Distributions and Plan Sponsor Online Support for additional information. Q: What do I need to know about submitting census data? A: Census data should be submitted to AUL by the communicated deadline each year. If our services agreement and/or your plan document specifies, the following services are provided based on the submission of your census: Annual report preparation Forfeiture reallocation Participant status updates Participant vesting calculations Compliance testing Form 5500 series return filing preparation Absence of census information will impact the following: Annual report participant vesting may calculate a year of service for all employees. Participant statuses may not be updated. Required testing cannot be completed. Form 5500 series return filing may be missing important information. Benefit distributions vested percentages may be inaccurate. Forfeiture reallocations cannot be processed. P a g e 7

8 Q: What if I submit census data after the deadline? A: The following is a chart illustrating the impact of delayed census submission: Census Received: By published deadline After published deadline: Result: All testing and reporting will be completed to meet regulatory deadlines. Refunds due to failed Actual Deferral Percentage (ADP)/Actual Contribution Percentage (ACP) tests will not be completed within 2½ months after the end of the plan year (six months after the end of the plan year for plans with an Eligible Automatic Contribution Arrangement). The plan sponsor will owe an additional excise tax equal to 10 percent of the excess contributions and/or excess aggregate contributions refunded. Refunds due to excess deferrals may be late and affected participants may be subject to double taxation on the excess. 9½ month extended filing deadline for Form 5500 series return filing may be compromised. You may need to make arrangements for an outside preparer to complete the Form 5500 series return. 9½ month deadline for correcting coverage failure or any required specialized testing failure may be missed. The plan may be in operational noncompliance with the plan document and subject to disqualification and applicable filings and penalties. AUL will proceed with producing your annual report without receipt of census data approximately three months after the end of the plan year. Should you submit a census after the annual report has been processed, we will automatically reprocess your annual report and a rework fee will be assessed for each service that must be reproduced. Q: How does AUL assist with census completion? A: AUL assists by: Providing a wealth of information regarding census completion including census instructions, frequently asked questions (FAQs), checklists and year end services workshop materials through the Year End Services Center on esponsor. Conducting Year End Services Workshops annually at select local offices. Providing support from your plan services consultant. Providing support from our Data Transmission Unit available Monday-Friday 8:00 am to 5:00 pm EST at ext For more information regarding census completion see Plan Sponsor Online Support. Q: What do I need to know about distributing notices and reports? A: The following notices and reports should be distributed if applicable: Safe harbor SIMPLE Qualified Automatic Contribution Arrangement (QACA) Eligible Automatic Contribution Arrangement (EACA) Qualified Default Investment Alternative (QDIA) Summary Annual Report (SAR) Information regarding investment options Participant Fee Disclosure If applicable, the above must be distributed at least annually; however, certain plan changes may require P a g e 8

9 that you distribute more frequently and different distribution rules apply for new employees. See Enrollments for additional information. Your plan may contain more than one of the features indicated above and may require multiple notices. In addition, the DOL requires plan sponsors to distribute the most recent SPD to each employee within 90 days of his or her becoming a participant under the plan. If a plan amendment changes the content of the SPD, participants should receive either a Summary of Material Modification (SMM) or a new SPD. When distributing an SMM, participants should be informed that an SMM is an addition to their SPD. Q: How does AUL assist with distribution of notices and reports? A: AUL assists by preparing and posting the following on esponsor so you can print and distribute to participants: Safe harbor, QACA, EACA and QDIA notices SAR SPDs SMMs Participant Fee Disclosure document In addition, if elected, Investment Advice is available. Investment education materials can be on One Day is Today. See Plan Sponsor Online Support and Enrollments for additional information. Q: What do I need to know about filing a Form 5500 and related schedules? A: Plan sponsors are required to file an annual tax return for each qualified plan they maintain. The DOL Form 5500 including related schedules provides detail of the following: Financial activity Participant data Plan characteristics Funding information Compliance information Plans with fewer than 100 participants may file a Form 5500-SF. The Form 5500-SF does not have schedules. The Form 5500-SF includes sections provide a summary of the following: Financial activity Participant data Plan characteristics Funding information Compliance information Other information regarding the Form 5500 filing: Form 5500, Form 5500-SF and Form SSA (if applicable) are due 7 months after the end of the plan year. If an extension is filed, Forms are due 9½ months after the end of the plan year. The type of filing and schedules required is dependent on the type of plan, number of participants and activity that occurred during the plan year. Large filers require an audit by an independent auditor and the Auditor Opinion information is required to complete the filing. Form 5500 or Form 5500-SF must be filed electronically. The Form 8955-SSA may be filed electronically but you may also print and mail if needed. We provide the information needed for you to file the Form 8955-SSA electronically and encourage you to do so. Q: How does AUL assist with Form 5500 filing? A: AUL assists by: Preparing a Form 5500 series return filing (if contracted to do so) and Form 8955-SSA (if applicable) and posting the filing on esponsor. Providing reference materials such as a 5500 Overview and Auditor Help Sheet for Schedule H on the Year End Services Center on esponsor. P a g e 9

10 See Plan Sponsor Online Support for additional information. Q: What do I need to know about following fiduciary guidelines and standards? A: The following are some items you may want to consider to help fulfill your fiduciary responsibility: Maintain a plan document that is updated for required legislative provisions. Verify that the plan is administered in accordance with the plan document. Maintain a fidelity bond in the amount required. Maintain a written investment policy. Conduct educational meetings. Document all procedures and decisions. Q: How does AUL assist with following fiduciary guidelines? A: AUL assists by: Preparing amendments and/or restatements to comply with legislative provisions if your plan is an adoption of an AUL prototype or volume submitter document. Providing Plan Entry and Contribution reports available through esponsor to notify you of approaching eligibility dates for employees. Providing information regarding fidelity bonding requirements. See Plan Sponsor Online Support and Reports for additional information. Contributions Employee or employer contributions are received by AUL for the benefit of a participant and are allocated to the participant s accounts to provide retirement benefits at normal retirement age or, if applicable, early retirement age. Q: Who makes contributions? A: The employer and/or employee can make contributions. The types of contributions allowed are determined by your type of plan and are specified in the plan document and/or adoption agreement. Q: What employee contribution sources are allowed in a plan? A: Employee contribution sources include: Elective deferrals Voluntary after-tax contributions Roth deferrals Rollover contributions The contribution sources allowed in your plan are dependent on your plan type and plan document and/or adoption agreement. Q: What employer contribution sources are allowed in a plan? A: Employer contribution sources include: Matching contributions (including a safe harbor match) Non-elective contributions (including a safe harbor non-elective contribution) Other employer contributions The contribution sources allowed in your plan are dependent on your plan type and plan document and/or adoption agreement. Elective Deferrals An employee elective deferral - also called 401(k) elective deferral, 403(b) deferral or employee pre-tax contribution - is the amount an employee elects to defer from his or her salary into a plan. This is usually expressed as a percentage of pay. Q: How are elective deferrals taxed? A: Elective deferrals are reported on Form W-2. While elective deferrals are not treated as current income for purposes of federal taxes, they are subject to FICA, Medicare, and federal unemployment taxes. Earnings attributable to elective deferrals are also not taxed until distributed. P a g e 10

11 Q: Are elective deferrals considered part of the participant s taxable income? A: Elective deferrals reduce the participant s current taxable income for federal and sometimes state and local taxes that are withheld. Q: When can elective deferral contributions begin? A: Elective deferrals may begin when: The plan document, adoption agreement or amendment to the plan which allows for deferrals has been executed. The employee meets the eligibility and entry requirements. The employee has signed a salary reduction agreement. Elective Deferral Limit Code section 402(g) limits the amount of elective deferrals that may be made during the calendar year. Amounts in excess of the 402(g) limit are called excess deferrals. The limit for the 2018 calendar year is $18,500. Roth deferrals are included with elective deferrals when determining contributions that count toward the 402(g) annual deferral limit. Q: What if a participant has elective deferrals in more than one plan? A: If a participant contributes elective deferrals to more than one plan, the total deferrals for all plans combined cannot exceed the 402(g) deferral limit. If the employer sponsors more than one plan that allows elective deferrals, AUL will assist with monitoring the 402(g) limit and making corrective distributions of excess deferrals as long as all plan assets are with AUL and there is an agreement in place electing this service. If the employer sponsors more than one plan that allows elective deferrals and all plan assets are not with AUL or there is not an agreement electing this service, the employer is responsible for monitoring the elective deferral limit and requesting any necessary corrective distributions of excess deferrals. If a participant is contributing elective deferrals to plans of two or more unrelated employers, the participant is responsible for monitoring the elective deferral limit and requesting any necessary corrective distributions of excess deferrals. Q: When must corrective distributions be made? A: Excess deferrals must be distributed from a plan by April 15th of the calendar year following the year they are made. Failure to distribute excess deferrals timely will: Result in double taxation to the participant May place the plan at risk for disqualification The 402(g) limit is a calendar year limit; therefore, April 15th is the deadline date regardless of plan year. Q: Are there other deferral limits? A: Some plans are subject to Actual Deferral Percentage (ADP) testing. This test limits the amount of elective deferrals that can be made by highly compensated employees (HCEs). For more information on the ADP test, HCEs and plans subject to ADP testing, see the Census Instructions under the Year End Services Center on esponsor. Q: Can a participant ever defer more than allowed by the 402(g) deferral limit? A: 401(k) Plans: If the plan allows, participants who are or will become 50 during the calendar year are eligible to make catchup contributions. However, at least one of four limits must be exceeded before amounts can be considered catch-up. The applicable limits are (a) the maximum dollar deferral limit (the 402(g) limit); (b) the annual additions limit, which is the lesser of 100 percent of P a g e 11

12 compensation or $55,000 (subject to a Cost of Living Adjustment (COLA)); (c) the plan s deferral limit (for example, a plan may have a maximum deferral percentage limit of 15 percent of compensation) for a particular plan year; or (d) the ADP limit for a HCE in a particular plan year. The catch-up limit is $6,000 in (b) Plans: If the plan allows, participants who are or will become 50 during the calendar year are eligible to make catchup contributions. Deferrals must exceed one of four limits before amounts can be considered catch-up. The Age 50 catch-up limit is $6,000 in (b) plan regulations allow for an additional special catch-up. The special catch-up limit applies only to "qualified employees" of a "qualified organization" and provides for an increase of up to $3,000 in the elective deferral limit. If both the Age 50 catch-up and special catch-up are allowed, a participant must utilize the special catch-up first. 457(b) Plans: Non-governmental 457(b) plans and Governmental 457(b) plans: The 457(b) contribution limit is $18,500 for If combined with a 401(k) or 403(b) plan, the limit is $37,000. Unlike 401(k) and 403(b) plans, the 457(b) limit is the total of both employee and employer contributions that are allocated to a participant s account. Participants who are within three years of their normal retirement age may be able to elect a special catch-up contribution of up to twice the annual limit or $37,000 in Non-governmental tax-exempt top hat 457(b) plans: Age 50 catch-up is not permitted. Governmental 457(b) plans: Age 50 catch-up is permitted. The limit is $6,000 in Governmental 457(b) plan participants may only make one of the catch-up contributions (i.e., Age 50 or three years until NRA). If a 457(b) plan is combined with a 401(k) or 403(b) plan, separate catch-up limits apply to each plan. For more information regarding catch-up contributions, see the Census Instructions under the Year End Services Center on esponsor. Roth Deferrals & Voluntary After-tax Contributions The Economic Growth Tax Relief Reconciliation Act of 2001 (EGTRRA) added a provision effective 1/1/2006 that allows participants in electing 401(k) and 403(b) plans to designate that some or all of their contributions be designated as Roth deferrals. Roth deferrals are after-tax contributions that are not taxed upon distribution. The earnings associated with Roth deferrals are also tax free upon distribution if certain withdrawal restrictions are satisfied. Q: What are voluntary after-tax contributions? A: A voluntary after-tax contribution is an election made by the employee to defer after-tax monies into the plan. These monies are not related to Roth deferrals. Q: How are Roth deferrals and voluntary after-tax contributions taxed? A: Income taxes are paid on these amounts before they are contributed. Therefore, there is no taxation on Roth deferrals or voluntary after-tax contributions when withdrawn. Taxation of earnings on Roth deferrals: Earnings attributable to Roth deferrals are tax free if the distribution does not occur until age 59½, death or disability and the Roth deferrals satisfy the five-year nonexclusion period. If both conditions are satisfied, the distribution is considered a qualified distribution. P a g e 12

13 Taxation of earnings on voluntary after-tax contributions: Earnings attributable to voluntary aftertax contributions are taxable upon distribution. There are special tax rules that affect employee voluntary after-tax contributions that were made prior to AUL tracks these amounts separately. Q: What is the five-year nonexclusion period for Roth deferrals? A: A distribution from a Roth account is not qualified if it occurs within the five-year taxable period beginning on the earlier of: The first taxable year for which an individual made a designated Roth deferral. In case of a Roth account that includes a rollover, the first taxable year for which an individual made a designated Roth deferral to the rollover account. Q: Are Roth deferrals and/or voluntary aftertax contributions considered part of the participant s taxable income? A: Yes. Taxes are paid on both Roth deferrals and voluntary after-tax contributions. Q: When can Roth deferrals and/or voluntary after-tax contributions begin? A: Roth deferrals and/or voluntary after-tax contributions may begin when the following conditions are satisfied: The plan document, adoption agreement or amendment to the plan which allows for Roth deferrals has been executed. The employee meets the eligibility and entry requirements. The employee has signed a salary reduction agreement that indicates the amount or percentage of Roth deferrals to be made. Q: Should we tell our participants to make Roth deferrals instead of elective deferrals? A: The decision to make Roth deferrals in addition to or in lieu of elective deferrals should be made by the participant on an individual basis. In certain cases Roth deferrals may be beneficial if the participant estimates that he or she will be in a higher tax bracket at retirement. Q: How are Roth deferrals different than voluntary after-tax contributions? A: The earnings on Roth deferrals are tax free if the withdrawal restrictions are satisfied. After-tax contribution earnings that are not derived from Roth deferrals are subject to taxes upon distribution. Roth Deferrals and Voluntary After-Tax Limits Code section 402(g) limits the amount of Roth deferrals and elective deferrals that may be made during the calendar year. Roth deferrals and elective deferrals are combined. Amounts in excess of the 402(g) deferral limit are called excess deferrals. The limit for the 2018 calendar year is $18,500. Q: Are voluntary after-tax contributions counted as part of the 402(g) limit? A: No. Only Roth deferrals and elective deferrals are counted towards the 402(g) limit. Q: Are there other limits for Roth deferrals? A: Some plans are subject to ADP testing. This test limits the amount of Roth deferrals and elective deferrals that can be made by HCEs. For more information on the ADP test, HCEs, and plans subject to ADP testing, see the Census Instructions under the Year End Services Center on esponsor. Q: Are there other limits for voluntary aftertax contributions? A: Most plans that contain voluntary after-tax contributions are subject to Actual Contribution Percentage (ACP) testing. This test limits the amount of voluntary after-tax contributions and employer matching contributions that can be made by HCEs. P a g e 13

14 For more information on the ACP test, HCEs and plans exempt from ACP testing, see the Census Instructions under the Year End Services Center on esponsor. Rollover Contributions A rollover contribution results when an employee directs that a distribution from a prior qualified plan be a contribution into another qualified plan. Q: How do I determine whether our plan allows rollover contributions? A: Your adoption agreement and/or plan document will specify if rollovers are allowed and indicate allowable rollover sources. Q: Who is eligible to make a rollover contribution? A: Your adoption agreement and/or plan document will specify who is eligible to make a rollover contribution to your plan. Your plan may: Require that eligibility requirements for participation be satisfied. Allow for rollovers prior to satisfying eligibility requirements. Q: Where does a rollover contribution come from? A: A rollover contribution may be sent to your plan from: Another employer plan An IRA See Submitting Rollover Contributions for more information regarding your responsibilities and the necessary steps for your plan to receive a rollover contribution. adoption agreement and/or plan document. The match formula or amount of match can be: Discretionary and determined each year A fixed percentage Tiered such as dollar for dollar for the first 3 percent and $.50 per dollar for the next 2 percent deferred Limited to a certain dollar up to a percentage of compensation deferred such as dollar for dollar up to 6 percent of compensation deferred Some plans have specific formulas that must be followed based on the plan type (e.g., a safe harbor plan). It is important that you follow your adoption agreement. Some matching formulas may subject your plan to specialized testing. Please contact your plan services consultant with any questions. Q: What is a Qualified Matching Contribution (QMAC)? A: A qualified matching contribution (QMAC) is a contribution that: Must be 100 percent vested May not be available for hardship withdrawals Is generally subject to the same restrictions as elective deferrals A QMAC may be used to satisfy a failed ADP test or ACP test in lieu of making refunds if your adoption agreement or plan document allows. However, there are restrictions if your plan utilizes the prior year testing method. Employer Matching Contributions An employer matching contribution is a contribution that is based on a participant s elective deferral, Roth deferral or employee voluntary after-tax contribution. Q: How is the match determined? A: The amount of match or the formula used to calculate the amount of match is determined by your P a g e 14

15 Match Limits Most plans that contain employer matching contributions are subject to ACP testing. This test limits the amount of employer matching contributions and voluntary after-tax contributions that can be made by HCEs. For more information on the ACP test, HCEs, and plans exempt from ACP testing, see the Census Instructions under the Year End Services Center on esponsor. Non-Elective Employer Contributions Non-elective employer contributions are employer contributions that are not based upon any kind of employee contribution. Q: What are safe harbor non-elective contributions? A: The safe harbor non-elective formula stipulates that the employer must make a contribution of no less than 3 percent of compensation for non-highly compensated employees (NHCEs). This contribution amount is allocated on a pro-rata basis to all eligible employees. This formula may be enhanced to include HCEs as well. Q: What is a Qualified Non-Elective Contribution (QNEC)? A: A qualified non-elective contribution (QNEC) is a contribution that: Must be 100 percent vested May not be available for hardship withdrawals Is generally subject to the same restrictions as elective deferrals A QNEC may be used to satisfy a failed ADP test or ACP test in lieu of making refunds if your adoption agreement or plan document allows. However, there are restrictions if your plan utilizes the prior year testing method. Other Employer Contributions Other employer contributions may include employer profit sharing and money purchase plan contributions. Q: How is the employer profit sharing contribution determined? A: The amount of an employer profit sharing contribution or the contribution formula is determined by your adoption agreement and/or plan document. The formula or amount of contribution can be: Discretionary and determined each year A fixed percentage A fixed dollar amount Integrated with the Social Security Taxable Wage Base Based on an age weighted or service weighted formula Based on other criteria Some employer profit sharing formulas may subject your plan to specialized testing. Q: How is the money purchase plan contribution determined? A: Money purchase plan contributions are mandatory each year and are generally based on each participant s compensation. The adoption agreement and/or plan document for each money purchase plan will specify the formula. Limits on Total Contributions Code section 415 annual additions limitation test limits the contributions that may be allocated to a participant s account during the plan year. Contributions include: Elective deferrals Employee voluntary contributions Roth contributions Employer matching contributions Employer non-elective contributions Other employer contributions Reallocated forfeitures P a g e 15

16 For more information on the annual additions limitation test, see the Census Instructions under the Year End Services Center on esponsor. Submitting Contributions and Loan Repayments As plan administrator, you are responsible for: Deducting and submitting elective deferrals, Roth deferrals, voluntary after-tax contributions and loan repayments. Calculating and submitting employer contributions including employer matching contributions, non-elective contributions and other employer contributions. Q: When are employee contributions and loan repayments due? A: Plans that are subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA) must satisfy Department of Labor (DOL) requirements regarding the timely remittance of employee deferrals, after-tax contributions and participant loan repayments. Most profit sharing, money purchase, 401(k) and 403(b) plans are subject to Title I. There are a few types of plans that are exempt from Title I. These include 457(b) plans and church plans that have not elected to be subject to the minimum eligibility and vesting requirements of ERISA and the Internal Revenue Code. The purpose of the DOL regulations regarding the timing of depositing employee contributions (including deferrals) and payroll-deducted loan repayments into a qualified retirement plan trust is to ensure that the funds are being invested in the plans rather than remaining in the employer s general corporate funds. The DOL regulations contain a safe harbor period for remitting employee contributions and loan repayments for small retirement plans (plans with fewer than 100 participants at the beginning of the plan year). Under this safe harbor period, employee contributions and loan repayments to a small plan will be deemed to have been timely remitted if those amounts are deposited to the plan within seven business days after they were received or withheld by the employer. Of course, sponsors of small retirement plans may make deposits before the end of the seven day period. The current deposit rules for large retirement plans (plans with 100 or more participants at the beginning of the plan year) state that the employer must transmit employee contributions and loan repayments to retirement plans as soon as they can reasonably be segregated from the general assets of the employer. The DOL has determined that in some instances, employee contributions including deferrals and loan repayments can reasonably be segregated within two business days of receipt or withholding by employers. Q: What are the consequences if the employee plan withholdings are not remitted on a timely basis? A: If the employee plan withholdings are not remitted timely, the employer will be treated as having engaged in a prohibited transaction with respect to the late remittances, resulting in an excise tax being owed by the employer. The employer would also be responsible for the investment losses due to the late deposit. Submitting Rollover Contributions As plan administrator, you are responsible for authorizing the allocation of eligible rollovers. Q: How is the determination as to whether or not an employee is eligible to make a rollover contribution made? A: Review your adoption agreement/plan document. Some plans require that an employee meet plan eligibility requirements for participation before the plan will accept rollover contributions. Q: If an employee is eligible to make a rollover contribution, what is the first step? A: The employee must be enrolled before the rollover contribution is submitted. In addition, the employee should complete investment option elections prior to the submission of the rollover contribution. P a g e 16

17 Q: What if investment option elections are not received prior to contributions being made? A: If a participant does not complete investment option elections prior to a rollover contribution being received by AUL, the monies will be invested in the default investment option specified in your AUL contract. These monies will remain invested in the default investment option until the participant completes an investment transfer. If an employee has made an investment option election for contributions, there does not need to be a separate investment option election for the rollover contribution. See Investment Elections for more information. Q: What is the procedure for submitting a rollover contribution? A: Employees interested in completing a rollover into their AUL retirement account should ask the current provider about distribution requirements. If the prior carrier will accept an AUL form, the employee should complete the Rollovers and Direct Transfers form. If an employee has questions on the rollover process, he or she can contact a Rollover Specialist at , option #2. If you have any questions about the rollover process, please contact your plan services consultant. Confirmation of Contribution Receipt and Allocation If there are contributions that cannot be allocated, those funds will be refunded back to you. Q: Why would contributions not be allocated? A: There are several reasons why a contribution may not be allocated to an individual s account and necessitate a refund. These reasons include: Employee is not yet eligible Employee is not enrolled in the plan Employee is suspended from making elective deferrals due to hardship withdrawal Q: Is there a way to verify contributions have been received? A: Yes, you may view confirmations esponsor. Go to: Financial Details Financial Activity Contribution Detail Select Data Range Submit If you or the employee receive a rollover check, it should be mailed to: American United Life Insurance Company 6805 Reliable Parkway Chicago, IL Once AUL receives the rollover check, you will receive an Employer Authorization Letter to review, sign, and return if required by your plan. To complete the Employer Authorization Letter, you may need to request and review information from the prior carrier (e.g., plan type, money type, etc.) P a g e 17

18 Distributions A distribution is a disbursement of a participant s vested account balance plus earnings. Q: What are the plan administrator s responsibilities? A: As the plan administrator, you are responsible for: Determining which types of distributions are available to participants under your plan. Obtaining appropriate Spousal Consent and/or Qualified Joint & Survivor Annuity Waiver forms (if applicable) and retaining them for your permanent files. Submitting the appropriate distribution request form to AUL. Verifying both the participant s and your signature. Additional information about distributions, waivers and forms can be found on the secure esponsor website. Q: What are AUL s responsibilities? A: AUL will: Discuss distribution options, complete the appropriate distribution forms and mail to the participant a signature ready form along with the Special Tax Notice Regarding Payments and, if applicable, any Spousal Consent and/or Qualified Joint & Survivor Annuity Waiver forms. Please note that AUL will provide a participant with a Separation from Service Distribution Request form only if the participant s status is Terminated and a Date of Termination is on file. Process the distribution upon receipt of the distribution form that contains both the participant s and your signature. Q: What are the types of distributions? A: Distribution types include post-employment and inservice withdrawals (for participants who are actively employed). In addition, there are corrective distributions, qualified domestic relations orders (QDROs) and required minimum distributions (RMDs) which may occur during or after employment. Important Note: The types of distributions allowed in your plan are dependent on your plan type and plan document and/or adoption agreement. Post-employment distributions There are several forms of post-employment distributions. Post-employment distributions include: Termination of Employment - Distribution made to a participant who leaves active employment for reasons other than retirement, disability or death. Mandatory (often referred to as Involuntary) Cash-Out of $1,001-$5,000 - Distribution made to a participant who has not requested a payout of his or her account balance. o Available if plan allows and if participant s account balance is between $1,001 and $5,000. Notice will be sent to the participant and the vested account balance plus earnings will be rolled over to an IRA established in the participant s name if no other directions are received from the participant. o If you elected to use the AUL IRA for Mandatory Cash-Outs, AUL will distribute the participant s account balance from your plan, establish an IRA for the participant, assume responsibility for maintaining an IRA for the participant and send all further communications to the participant. o For more information see Mandatory (Involuntary) Cash-Out Overview. Mandatory Cash-Out of $1,000 or less - Distribution made to a participant who has not requested a payout of his or her account balance. o Available if plan allows and if participant s account balance is $1,000 or less. Notice will be sent to P a g e 18

19 the participant and the vested account balance plus earnings will be distributed as a taxable withdrawal to the participant if no other directions are received from the participant. o If the account balance is less than $200, the plan may make a distribution without sending a notice. o For more information see Mandatory (Involuntary) Cash-Out Overview. Normal Retirement - Distribution made to a participant when the specified normal retirement age is reached (usually age 65) according to your plan document. o A participant may be allowed to work past his/her retirement date. If this is the case, the participant is able to continue to contribute to the plan and receive any employer contributions (if contribution eligibility conditions have been met). o A participant is considered 100 percent vested upon meeting retirement age regardless of years of service. o Early Retirement - Distribution made to a participant who has not met the normal retirement age as defined in your document but the plan allows retirement at an earlier age without losing any benefits. Death Benefit - Distribution made to the participant s beneficiary. This amount is paid either as: o o o A lump sum payment paid to the participant s beneficiary or estate A rollover to another retirement plan or IRA for the benefit of the beneficiary A Qualified Pre-Retirement Survivor Annuity (QPSA) if your plan allows For more information about QPSAs, see Qualified Pre-Retirement Survivor Annuity (QPSA)/Qualified Joint Survivor Annuity (QJSA) Overview o If the beneficiary is a minor, the benefit should be paid to the minor s legal guardian, or to the custodian for the minor under your state s Uniform Gifts to Minors Act, Gift to Minors Act or Uniform Transfers to Minors Act. In addition, you must complete an Acknowledgement & Release form Disability - Distribution to a participant who has become disabled. o Your plan document outlines the guidelines considered for disability. Other - You should consider situations that do not fit into one the categories indicated and determine if the situation meets the Internal Revenue Service s distribution requirement. Contact your plan services consultant if you have questions. In-Service Withdrawals Plans may allow for distributions while still employed. In-service withdrawals include: Pre 59½ withdrawal - Some plans allow an actively employed participant to withdraw part of their vested account balance prior to reaching age 59½. This money is usually from after-tax accounts, but rollover money may also be eligible for withdrawal. A participant may not request an in-service withdrawal of deferrals prior to attaining age 59½ unless the withdrawal is for a hardship as described below. o The participant may be subject to a 10 percent early withdrawal penalty as well as the mandatory federal 20 percent withholding tax. Post 59½ withdrawal - Some plans allow an actively employed participant to withdraw part of their account balance after reaching age 59½. o Participants may be able to withdraw their vested money without incurring the 10 percent early withdrawal penalty; however, the distribution P a g e 19

20 might still be subject to the federal 20 percent withholding tax. Hardship withdrawal - Some plans allow for a distribution to an actively employed participant if a hardship is demonstrated such as: o Purchase of primary residence o Payment of tuition, room and board and related educational fees o Unreimbursed medical care expenses o Prevention of eviction from principal residence o o o Payment of burial or funeral expenses Expense for the repair of damage to the employee s principal residence that would qualify as a casualty deduction See Hardship Withdrawal Overview for additional information Loan - Some plans allow an actively employed participant to borrow funds from their account. o o o Under IRC 72(p)(2)(A), a participant may receive a nontaxable loan that equals up to the lesser of 50 percent of his vested accrued benefit or $50,000. Specific information regarding limits, repayment schedules, rate of interest, fees and availability are outlined in the Loan Procedures document. See Loan Administration for additional information. Post-Employment and/or In-Service Withdrawals Some distributions can occur either post-employment or while still employed. Distributions include: Qualified domestic relations order (QDRO) - A QDRO is a domestic relations order (DRO) that creates or recognizes the right of someone other than a participant to receive all or part of the participant s benefits under a pension plan. o QDROs are often associated with divorce settlements. o See Qualified Domestic Relations Orders (QDROs) Overview for additional information. Required Minimum Distribution (RMD) - An RMD is a mandatory distribution (with limited exceptions) made to participants who are 70½ years of age. Participants who own 5 percent or less of the plan sponsor company might be able to delay their RMDs until they retire. Your plan document will specify when participants must begin receiving RMDs. o The first distribution must occur by April 1st of the year following the year in which a participant reaches age 70½ (and, if applicable, has retired). Subsequent annual distributions must be made by December 31st. o See Required Minimum Distribution Overview for additional information. Corrective Distributions - Corrective distributions (which are sometimes referred to as refunds) are distributions that are made as a result of a failed compliance test or exceeding a statutory or plan limit. Examples of compliance tests that could result in refunds are: o Actual Deferral Percentage (ADP) test o Actual Contribution Percentage (ACP) test o Annual additions limit test Example of exceeding a statutory limit that could result in a refund is: o 402(g) deferral limit Example of exceeding a plan limit is: o Exceeding the plan limit set for deferrals (e.g., 10 percent of compensation) Distribution Assistance Overview AUL assists with distribution processing in three ways: Mandatory Cash-Out Assistance Distribution Assistance Card for participants P a g e 20

21 Distribution Assistance for participants utilizing our Participant Service Center Q: What is mandatory cash-out assistance? A: If your plan document allows, we will assist with the mandatory (sometimes referred to as involuntary) cash-out of terminated participants balances up to $5,000. Our Mandatory Cash-Out (MCO) Center on our secure esponsor website will provide a reporting of participants eligible for a mandatory cash-out based upon the participant data that you provide. There will be two options available to you: Automated: We will provide a report to you of MCO eligible participants. Unless you indicate in the MCO Center that you do not want the distribution processed, we will proceed with the distribution. Upon Approval: We will provide a report to you of the MCO eligible participants but will not process the distribution unless you indicate approval in the MCO Center. Contact your plan services consultant to receive an agreement and select an option. Q: How does the distribution assistance for participants work? A: Direct your plan participants to contact the Participant Service Center s Distribution Assistance Group for assistance completing forms at during normal business hours (8 a.m. to 8 p.m. Eastern Time). Distribution Assistance is a free service provided by AUL's Participant Service Center. A Distribution Assistance Card (which contains the number and hours of operation for the Distribution Assistance Group) should be shared with participants who are retiring or terminating employment to help them use AUL's Distribution Assistance service. Contact your Regional Office representative for a supply of Distribution Assistance Cards. To ensure participants can take full advantage of the Distribution Assistance service, it is important to update all status changes in a timely manner. For example, when employment terminates for an individual, his or her status should be changed to Terminated as soon as possible. For plans using the Distribution Assistance service, timely status updates will enable AUL s Participant Service Center to assist the former employee with preparing a signature-ready copy of the distribution form. Q: How do I obtain a distribution request form? A: Forms are available for your convenience on the secure esponsor website at under the Administration tab. Forms may be downloaded in an Adobe Acrobat PDF format and submitted via regular mail or fax. Our fax number is (317) Q: What forms are on the esponsor website? A: The following are some of the forms available on the secure esponsor website: Annuity Request (please see your plan document for applicability) Automatic Rollover IRA Agreement Separation from Service Distribution Request (please see your plan document for applicability) Involuntary Cash-Out Request In-Service Distribution Request (please see your plan document for applicability) Participant Status Sheet (Use to initiate Mandatory Cash-Out) Required Minimum Distribution Death Benefit Request QDRO Transfer Distribution Request Special Tax Notice Regarding Payments Spousal Consent and Qualified Joint & Survivor Annuity (QJSA) Waiver 50% Qualified Joint and Survivor Annuity (QJSA) Notice 100% Qualified Joint and Survivor Annuity (QJSA) Notice eloan Worksheet eloan Instruction Guide (Account Services and TeleServe ) Spousal Consent for Loan Distributions Sample QPSA Notice P a g e 21

22 Q: How can participants receive their distribution? A: Participants may instruct AUL to deposit termination and in-service proceeds directly into a bank account or receive a paper check. Updated Distribution Request forms allowing participants to provide bank information for direct deposit will be available to participants who call the Participant Service Center and to plan sponsors on esponsor. Mandatory Cash-Out (MCO) Overview MCOs are distributions made to participants who have not requested a payout of their account balance. Q: Must a plan allow for MCOs? A: MCOs are available only if the plan allows and there are three types: If a participant s account balance is between $1,001 and $5,000; a notice will be sent to the participant and the vested account balance plus earnings will be rolled over to an IRA established in the participant s name if no other directions are received from the participant. If a participant s account balance is $1,000 or less; a notice will be sent to the participant and the vested account balance plus earnings will be distributed if no other directions are received from the participant. If a participant s account balance is less than $200, the plan may make a distribution without sending a notice. The mandatory cash-out limit can be lowered to less than $5,000. Please review the terms of your plan document to determine the cash-out limit. Q: What reports are available for mandatory cash-outs? A: There are two reports available on esponsor under the Participant Data tab: MCO Ineligible Participants MCO Status Overview Report Q: What is the MCO Ineligible Participants report? A: The MCO Ineligible Participants report shows all participants that are eligible for MCO but we do not have a complete address on file. You should use this report to update participant addresses so that MCO processing can be completed. Q: What is the MCO Status Overview report? A: The MCO Status Overview report displays the status of each MCO by participant and the projected date of payout. Qualified Domestic Relations Orders (QDROs) Overview The following information is taken in whole or in part from QDROs- The Division of Pensions Through Qualified Domestic Relations Orders which was prepared by the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. It is not a complete rendering of this publication. Q: What is a QDRO? A: A qualified QDRO is a domestic relations order (DRO) that creates or recognizes the right of someone other than a participant to receive all or part of the participant s benefits under a pension plan. The non-participating party named in a QDRO is called the alternate payee and may be the spouse, former spouse, child, or other dependent of the participant. Generally, alternate payees are treated as beneficiaries under the plan. To the extent the plan gives certain rights to beneficiaries, those rights are extended to the alternate payee as well. In the event of any conflict, ERISA preempts state law and QDRO requirements. P a g e 22

23 Q: What is a DRO? A: A DRO is a judgment, decree or order (including the approval of a property settlement) issued by a state authority (generally a court) that: Is made pursuant to state domestic relations law (including community property law) Relates to the provision of child support, alimony payments, marital property rights for the benefit of a spouse, former spouse, child or other dependent of a participant Reference: IRC 414(p)(1)(B) Q: What makes a DRO a QDRO? A: For a domestic relations order to qualify as a qualified domestic relations order it must include: The name and last known mailing address of the participant and each alternate payee The name of each plan to which the order applies The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee The number of payments or time to which the order applies Reference: IRC 414(p)(2)(A)-(D) Q: May a QDRO be part of the divorce decree or property settlement? A: Yes. There is nothing in the Code requiring that a QDRO (that is the provisions that create or recognize an alternate payee s interest in a participant s pension benefits) be issued as a separate judgment or decree or order. Q: What else can be contained in the language of a QDRO? A: A QDRO may: Provide that the former spouse (and not the current spouse) of a participant shall be treated as a surviving spouse of such participant for Qualified Joint and Survivor and Qualified Pre-retirement Survivor Annuity purposes if they had been married for at least one year. Require that all or a portion of a participant s benefit be segregated in a separate account in the alternate payee s name and maintained until the earlier of the participant s retirement date or separation from service as allowed under the plan. In addition, the plan administrator may assess reasonable administrative fees incurred as result of such segregation against the segregated account. Q: Are there restrictions on what can be in a QDRO? A: Yes. A QDRO cannot: Provide any type or form of benefit or any distribution option not otherwise provided under the plan. Provide increased benefits (determined on the basis of actuarial value). Pay benefits to an alternate payee which are required to be paid to another alternate payee under another order previously determined to be a QDRO. Q: What are my responsibilities as plan administrator? A: Each plan is required to establish reasonable procedures to determine the qualified status of DRO and to administer distributions under such qualified orders. The plan administrator must promptly notify the participant and each alternate payee of the receipt of the DRO and the procedure for determining its qualified status. Within a reasonable period after receipt, the plan administrator must determine if such DRO meets the standards for a QDRO and notify the participant and each alternate payee of such determination. During this period, the benefit amount otherwise payable to the alternate payee must be segregated. P a g e 23

24 Q: Is a plan required to have written procedures for determining whether a DRO is a QDRO? A: Yes. Every pension plan is required to establish written procedures for determining whether DROs are QDROs and for administering distributions under QDROs. Q: What requirements must a plan s QDRO procedures meet? A: The QDRO procedures must: Be in writing Be reasonable Provide that each person specified in a DRO received by the plan as entitled to payment of benefits under the plan will be notified of the plan s procedures for making QDRO determinations upon receipt of a DRO Permit an alternate payee to designate a representative for receipt of copies of notices and plan information that are sent to the alternate payee with respect to a DRO Q: Is there a time limit to determine if a DRO is a QDRO? A: Plan administrators must determine whether a DRO is a QDRO within a reasonable period of time after receiving the order. What is a reasonable period of time will depend on the specific circumstances. The DOL does not consider the 18-month period during which a plan administrator must preserve segregated accounts to be a reasonable period. Q: What must a plan administrator do during the determination process to protect against wrongly paying pension benefits to the participant that may be due to an alternate payee? A: The plan administrator must separately account for the amounts that would be payable to an alternate payee under the terms of the order during such period as if the order had been determined to be a QDRO. These amounts are referred to as segregated amounts. During the determination period, the plan administrator must take steps to ensure that amounts that would have been payable to the alternate payee if the order were a QDRO are not distributed to the participant or any other person. The plan administrator s duty to separately account for and preserve the segregated amounts is limited to no longer than the end of an 18-month period. The 18- month period does not begin until the first date (after the plan receives the order) that the order would require payment to the alternate payee. Q: Must a plan comply with a QDRO? A: Yes, the plan is required to distribute benefits in accordance with the order, provided it does not: Require the plan to pay benefits in a form otherwise unavailable under the plan Increase the benefit otherwise payable Require payment to an alternate payee of any benefits which are required to be paid under a previous order to another alternate payee Q: What kind of notice is required to be provided by a plan administrator following a QDRO determination? A: The plan administrator is required to notify the participant and each alternate payee of the administrator s determination as to whether the DRO constitutes a QDRO. This notice should be in writing and furnished promptly following a determination. In the case of a determination that an order is not qualified, the notice should include: The reasons why the order is not a QDRO References to the plan provisions on which the plan administrator s determination is based An explanation of any time limits that apply to rights available to the parties under the plan (such as the duration of any protective actions the plan administrator will take) A description of any additional material, information or modifications necessary for the order to be a QDRO and an explanation of why such material, information or modifications are necessary P a g e 24

25 Q: Do QDRO provisions only apply to qualified plans? A: No, QDRO provisions also apply to 403(b) and 457(b) plans. Q: How are QDROs paid? A: The benefit may be paid in any form which may be paid under the plan to a participant (other than in the form of a joint and survivor annuity with respect to the alternate payee and his or her subsequent spouse). Note: If payment is allowed under the plan, the plan administrator may distribute to an alternate payee any vested benefit of less than $5,000 without first receiving the alternate payee s consent to the distribution. See Mandatory Cash-Out (MCO) Overview for additional information. Q: Can a QDRO distribution be directly rolled over into an IRA or another employer s qualified plan? A: All or part of a lump-sum distribution to a spouse or former spouse resulting from a QDRO may be rolled over to either vehicles. QDRO distributions to a non-spousal alternate payee are not eligible for rollover. Q: If a QDRO distribution is not rolled over, how is it taxed? A: A QDRO distribution is taxed in the year in which it is received. If the alternate payee is the participant s spouse or ex-spouse, the recipient is responsible for the taxes. Otherwise, taxes are the responsibility of the participant. Special tax treatment afforded qualified lump-sum distributions (e.g., 5-year or 10-year forwarding averaging) is not available. Q: Are QDRO distributions subject to the 10 percent early distribution penalty? A: No. QDRO distributions prior to the participant s or alternate payee s attainment of age 59½ are not subject to the 10 percent tax. Q: Can a plan that otherwise restricts inservice withdrawals be written in such a way as to permit immediate payout to an alternate payee per the terms of a QDRO? A: Yes, a plan may include a provision that, pursuant to a QDRO, allows distribution to an alternate payee regardless of the participant s age or employment status, without jeopardizing the plan s qualified status. Q: If the benefit to be distributed to an alternate payee under a QDRO exceeds $5,000 and is to be segregated and deferred until a future date, does the alternate payee have any say in the investment of the account? A: Only if the plan gives beneficiaries and alternate payees the right and the QDRO addresses this matter. Q: What happens to the rights created by a QDRO if the plan to which the QDRO applies is amended, merged into another plan or is maintained by a successor employer? A: The rights of an alternate payee under a QDRO are protected in the event of plan amendments, a plan merger or a change in the sponsor of the plan to the same extent that rights of participants or beneficiaries are protected with respect to benefits accrued as of the date of the event. Q: What happens to the rights created by a QDRO if a plan is terminated? A: The rights granted by a QDRO must be taken into account in the termination of a plan as if the terms of the QDRO were part of the plan. To the extent that the QDRO grants the alternate payee part of the participant s benefits, the plan administrator, in terminating the plan, must provide the alternate payee with the notification, consent, payment or other rights that it would have provided the participant with respect to that portion of the participant s benefits. P a g e 25

26 Qualified Pre-Retirement Survivor Annuity (QPSA)/Qualified Joint Survivor Annuity (QJSA) QPSAs and QJSAs benefits provide some protection to surviving spouses of deceased participants who had earned a vested retirement before death. The nature of the protection depends on the type of plan and whether the participant dies before or after payment of the pension benefit is scheduled to begin (the annuity starting date). Q: Must all plans have survivor benefits? A: Defined contribution plans subject to the minimum funding standards (e.g., money purchase plans) are required to provide automatic survivor benefits. Profit sharing and 401(k) plans must also provide automatic survivor benefits unless they satisfy certain other requirements designed to protect spousal rights to retirement benefits. Q: Must benefits be paid as a QJSA or QPSA? A: Payments from a plan subject to the QPSA/QJSA rules to a vested participant who retires must be paid in the form of a QJSA unless both the participant and his/her spouse consent to another form of benefit permitted by the plan. The benefit for a vested participant who dies before receiving benefits must be paid in the form of a QPSA unless the participant and his/her spouse have waived the QPSA and have elected another form of payment permitted by the plan. Q: What is a QJSA? A: A QJSA is a series of equal, periodic payments over the participant s lifetime with a payment continuing to the participant s spouse for the rest of his/her life if he/she survives the participant. To satisfy the QJSA requirement, a defined contribution plan must purchase a nontransferable joint life annuity contract for the participant and spouse. The periodic payment to the surviving spouse must be: At least 50 percent Not more than 100 percent of the periodic payment(s) received during the participant and spouse s joint lives The plan will specify the percentage. Q: What is a QPSA? A: A QPSA is a series of equal, periodic payments over the surviving spouse s lifetime. To satisfy the QPSA requirement, a defined contribution plan must purchase a nontransferable life annuity contract for the spouse. The plan will specify the percentage of the participant s vested account balance used to purchase the QPSA. The percentage of the participant s vested account balance used to purchase the QPSA must be: At least 50 percent Not more than 100 percent The plan may require that a spouse be married to the participant for the one-year period ending on the earlier of the date annuity payments to the participant begin or the date of the participant s death in order to be eligible for the QJSA/QPSA. Q: How can a plan be exempt from the QJSA/QPSA requirements? A: A profit sharing or 401(k) plan may be exempt from the QJSA/QPSA requirements if the plan: Provides that upon the participant s death, the participant s vested account balance will be paid in full to the spouse Does not permit the participant to elect a life annuity distribution option Requires that if the participant wants to select a beneficiary other than the spouse, the spouse give written consent Requires that the spouse s consent be witnessed by a notary or plan representative Has not received direct transfer(s) from a plan that was subject to the QJSA/QPSA requirements P a g e 26

27 Direct rollovers or elective transfers made by participant election are not affected. Only employerdriven transfers are affected. The plan may require that a spouse be married to the participant for one year prior to the participant s death in order to be entitled to the participant s vested account balance. Q: What are the QPSA notice and waiver requirements? A: The notice requirements require that during specific time periods a detailed written explanation be given to the participant regarding the rights of the participant and spouse, along with a form to waive the QPSA. The explanation must include: The terms and conditions of the QPSA The participant s right to waive the QPSA and effect of the waiver The participant s right to revoke a waiver and the effect of the revocation The rights of the participant s spouse The explanation must be furnished to vested participants and to non-vested participants currently employed by the employer maintaining the plan. Q: When must the QPSA Notice and Waiver be distributed? A: A plan must provide the explanation of the QPSA and the right to decline it within the applicable period, which is the latest of: a. A three-year period beginning with the first day of the plan year in which a participant reaches age 32 and ending on the last day of the plan year preceding the plan year in which the participant reaches age 35 b. A reasonable period after the individual becomes a plan participant c. A reasonable period of time after the plan is amended to permit the participant to waive the QJSA/QPSA d. A reasonable period of time after the plan is amended to permit the participant to select a nonspouse beneficiary e. A reasonable period of time after the plan stops fully subsidizing the cost of the QJSA/QPSA f. A reasonable period of time after the survivor benefit provisions become applicable to a participant The applicable period for events b.-f. begins one year before the date the event occurs. A reasonable period of time for events b.-f. ends on the one-year anniversary of the date the event occurs. Therefore, the applicable period for events b.-f. is any time during the two-year period beginning one year before the date the event occurs and ending on the one-year anniversary of the event. If a participant separates from service before age 35, the applicable period is the two-year period beginning one year before the separation from service and ending one year after the separation. If the participant returns to service, the applicable period must be re-determined under the general rules described above. Q: Is there sample language for the notice? A: The following is suggested employee level communication language. Please review this with your legal counsel and make those changes deemed necessary. You may copy this to your letterhead or company memo, attach to the Beneficiary Designation form and distribute to affected employees: P a g e 27

28 Date: To: From: Subject: Beneficiary Requirements Federal legislation, effective on January 1, 1985, created requirements for all retirement plans. Among the changes were rules concerning spousal rights to benefits upon the death of a participant. Accordingly, this law affects your beneficiary designation while you are a participant in the plan. Even though you previously completed a beneficiary designation form when initially enrolled in the plan, we are required, by the Retirement Equity Act of 1984, to provide this notice for employees who attain age 34 during the plan year. Please re-complete this form and return at your earliest convenience. HOW THE LEGISLATION AFFECTS YOU: If you are married and die before retirement, the law requires that at least [Insert 50 percent or 100 percent] of your vested account balance be used to provide benefits for your spouse. This benefit is formally called a Pre-Retirement Survivor Annuity. It will provide your spouse with a series of monthly payments for his/her life (or, at his/her option, a benefit of equal value in any other form of payment available under our plan). You, however, may waive this Pre-Retirement Survivor Annuity and designate someone other than your spouse as your beneficiary under the plan. In this event, your spouse must consent to this waiver in writing witnessed by a plan official or notary public. If your spouse consents to the waiver, you may revoke the waiver at any time before your death, and if you want, make a new election subject to the same provisions as specified above. To waive this Pre-Retirement Survivor Annuity, both you and your spouse must complete the attached Beneficiary Designation Form and return it to [Insert plan administrator name and address]. It is important that you and your spouse understand your respective rights and obligations concerning benefits payable upon death, and particularly the financial implications for your spouse if waiving the Pre-Retirement Survivor Annuity. Upon the death of any married participant, the terms of our plan (i.e., [Insert 50 percent or 100 percent] payable to the spouse) will supersede any Beneficiary Designation on file that does not comply with the law. You should direct questions to the plan administrator, [Insert plan administrator name, address and/or phone number]. Additionally, since your spouse has certain government-mandated rights to the death benefit, you should immediately inform the plan administrator of any change in your marital status. P a g e 28

29 Q: When is the cost of the QJSA/QPSA fully subsidized? A: A defined contribution plan is fully subsidizing the cost of the cost of the QJSA if no other form of benefit under the plan could provide a benefit greater than that paid under the QJSA. The cost of a QPSA is fully subsidized if there is no charge or reduction to the benefit in order to provide the QPSA. There can be no charge or account reduction to provide the QPSA in a defined contribution plan, so a defined contribution plan always fully subsidizes the cost of the QPSA. Q: When must the participant waiver of QPSA be made? A: A waiver of the QPSA may be made at any time beginning on the first day of the plan year in which the participant turns 35 and ending on the earlier of the date: Annuity payments to the participant begin The participant dies A plan may permit the participant to waive the QPSA before the first day of the plan year in which the participant turns 35, but this waiver becomes invalid at the beginning of the plan year in which the participant s 35 th birthday occurs. A new QPSA notice must be provided, and the waiver period begins again. Q: What are the requirements of spousal consent to QPSA waiver? A: Spousal consent to a participant s waiver of the QPSA must: Be in writing Name the beneficiary (including any contingent beneficiaries), acknowledge the effect of the participant s waiver Be witnessed by a plan representative or a notary public Unlike a QJSA waiver and spousal consent, the QPSA waiver and spousal consent do not have to specify the form of pre-retirement benefit. The participant cannot subsequently change the beneficiary without the spouse s consent (unless the spouse is made the beneficiary). Whether or not a spousal consent is revocable is governed by the terms of the plan document, not retirement plan law. Q: May a spouse make a general consent QPSA waiver? A: A spouse may execute a general consent. A general consent permits a participant to waive the QPSA and change the designated beneficiary without further consent of the spouse required. A general consent is not valid unless it acknowledges that the spouse has the right to limit consent to a specific beneficiary, and that the spouse elects to relinquish this right. A general consent may be limited to certain beneficiaries. Q: When is spousal consent not required? A: Spousal consent to waive the QJSA or the QPSA is not required if it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located. If the spouse is legally incompetent to give consent, the spouse s legal guardian may give consent (even if the guardian is the participant). If the participant is legally separated or has been abandoned (within the meaning of local law) and has a court order to that effect, spousal consent is not required unless a Qualified Domestic Relations Order (QDRO) provides otherwise. Q: Can the QJSA/QPSA requirements be eliminated? A: Profit sharing and 401(k) plans currently offering annuity options may now eliminate the QJSA and QPSA (and other periodic payment options) via plan amendment if a single-sum distribution option is available on identical terms after the amendment. P a g e 29

30 QJSA/QPSA rules still apply to money purchase plans. Hardship Withdrawal Overview A hardship withdrawal is a distribution of eligible contributions from a 401(k), profit sharing or 403(b) plan due to a financial hardship and must be for an immediate and heavy financial need. Elective deferrals are generally distributed only if the participant s hardship satisfies the IRS s safe harbor definition of a hardship. Hardship distributions of employer contributions may also follow these rules. Q: What is the IRS s safe harbor definition of a hardship? A: The IRS has established reasons that satisfy the safe harbor definition of hardship. These reasons satisfy the immediate and financial need requirement: Purchase (excluding mortgage payments) of the participant s principal residence.* Payment of tuition, room and board and related educations fees for the next twelve months for college or post-secondary education for the participant, his/her spouse, children, dependents or beneficiaries. Unreimbursed medical care expenses or amounts necessary to obtain medical services for the participant or his/her dependents or beneficiaries. Preventing eviction from, or mortgage foreclosure on the participant s principal residence. Payments for burial or funeral expenses for the employee s deceased parent, spouse, children, dependents or beneficiaries. Expenses for the repair of damage to the employee s principal residence that would qualify for the casualty deduction under Code section 165. H.R. 1, the Tax Cuts and Jobs Act, modified the personal casualty deduction in section 165 of Internal Revenue Code. This change is effective from the beginning of 2018 through the end of 2025 and affects the safe harbor definition of a hardship withdrawal for expenses for the repair of damage to the participant s principal residence that would qualify for the casualty deduction under Internal Revenue Code 165. The change to Internal Revenue Code (Code) section 165 states that a casualty loss deduction is only available if the loss results 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 will only allow for hardship distributions for a casualty loss for losses resulting from a federally declared disaster. Additional guidance has been requested from the Internal Revenue Service (IRS) and there is a chance the regulation could be changed to continue to allow safe-harbor hardship distributions for casualty losses that would otherwise qualify, but for the federal disaster declaration provision. As plan administrator, you may choose to wait for additional information from the IRS before changing the manner in which you approve hardship withdrawals for casualty losses. However, if OneAmerica provides hardship review services for your plan, we will follow the new guidelines and only approve hardship distribution requests for losses resulting from a federally declared disaster. *While not specifically stated in the regulations, we believe the word construction could be substituted for the word purchase. Q: Are there other rules regarding a safe harbor hardship withdrawal? A: In addition to the reasons for the hardship distribution having to meet one of the safe harbor withdrawal reasons, the following requirements must be met in order to be eligible for a safe harbor hardship withdrawal: The amount of the withdrawal may not exceed the amount required to meet the need. However, the amount may be increased (i.e., grossed up) for anticipated federal and state income taxes and penalties and, if applicable, P a g e 30

31 the 10 percent premature distribution penalty under Internal Revenue Code section 72(t) if the participant is under 59½ years old. The participant must have received all available distributions or loans from both this plan and any other plan your organization sponsors. The participant s contributions (pre-tax and after-tax) to this plan and any other plan sponsored by your organization, except for mandatory employee contributions, must be suspended for six months (one year if elected in your plan document). Q: Must a plan allow for hardship withdrawals? A: No. Hardship withdrawals are an election to be made by the plan administrator in the plan document/adoption agreement. Q: Is there a minimum amount that must be taken as a hardship? A: To lessen your administrative burden, we suggest you require a dollar minimum (e.g., $500). Generally, maximum amounts are not pre-set. Q: What is the maximum amount that may be withdrawn? A: The distributable amount is limited to the employee s elective deferrals without earnings or losses as of the date of distribution less any previous distribution of elective deferrals. For example, if a participant has a current value of $40,000 in his or her elective deferral account. If he or she contributed $32,000 and had not taken any previous hardship withdrawals, $8,000 is earnings and is not available for withdrawal. The total available amount is $32,000. Q: Is there a maximum number of hardships allowed? A: No. However, the number of hardship withdrawal requests can be limited. A maximum of two in any given year should help avoid abuse of this provision. Q: What types of contributions are allowed to be withdrawn as a hardship? A: Your plan document/adoption agreement specifies which monies are available for hardship distributions. Qualified matching contributions, qualified nonelective contributions, deferrals reclassified as voluntary contributions and the investment earnings thereon may not be withdrawn prior to the participant attaining age 59½. Exception: If the plan provides, the amount available for hardship withdrawal may include income allocable to elective deferrals and by qualified matching contributions, qualified non-elective contributions, deferrals reclassified as voluntary contributions and the income associated with these monies if credited to the participant s account as of the later of December 31, 1988 or the end of the last plan year ending before July 1, Q: May hardship withdrawals be repaid? A: No, repayments may not be made. Q: What is the tax withholding on a hardship distribution? A: Hardship withdrawals are not considered eligible rollover distributions and, therefore, are not subject to the mandatory 20 percent withholding rules. These withdrawals must still be included in the participant s taxable income and will have 10 percent taxes withheld at the time of distribution unless the participant directs to withhold at a different rate. Q: What type of documentation should I have as plan administrator? A: As the withdrawal cannot be greater than the amount needed to satisfy the hardship (plus anticipated taxes and penalties), the following documentation should suffice: Executed builder s contract or purchase agreement that reflects the purchase or construction of the participant s principal residence. Tuition bill for the next twelve months. P a g e 31

32 Billing statements that reflect unreimbursed medical care expenses or the amount needed to obtain medical services. Notice of impending eviction from, or mortgage foreclosure on, the participant s principal residence. Funeral/burial bills showing that the participant is the responsible party and a statement indicating the amount of life insurance on the deceased. Repair bills for damage to the participant s principal residence that would qualify as a casualty deduction. Q: Is spousal consent required for a hardship withdrawal? A: Generally yes. Because the spouse s potential survivor benefit is affected by a financial hardship withdrawal, spousal consent is necessary if the plan is subject to joint and survivor rules (annuities are the normal form of benefit). Q: Is there sample language for a hardship withdrawal request? A: The following is suggested employee level communication language. Please review this with your legal counsel and make those changes deemed necessary. You may copy this to your letterhead or company memo. P a g e 32

33 REQUEST FOR FINANCIAL HARDSHIP WITHDRAWAL FOR [INSERT NAME OF PLAN] I understand a financial hardship withdrawal must be for an immediate and heavy financial need for which monies cannot be reasonably obtained from other resources. I also understand the amount may not exceed the amount required to meet the need. However, the amount may be grossed up for anticipated federal and state income taxes and penalties including the government imposed 10 percent penalty tax for early withdrawal, if applicable. Hardship withdrawals are not considered eligible rollover distributions and, therefore, are not subject to the mandatory 20 percent withholding rules. Theses withdrawals must still be included in my taxable income and will have 10 percent taxes withheld at time of distribution unless I direct otherwise. It is my understanding that I must certify that the need cannot be reasonably satisfied by other resources. I understand that other resources include: Reimbursement or compensation by insurance Liquidation of assets owned by me, my spouse or my minor children, if any, that does not create a financial hardship when sold My contributions (pre-tax and any after-tax) to this plan and any other plan sponsored by your organization, except for mandatory employee contributions, will be suspended for six months Loans from commercial lenders, such as a bank, on reasonable commercial terms Distributions or loans from both this plan and any other employee-sponsored plan in which I participate My maximum pre-tax contribution amount allowed by the IRS may be reduced in the next plan year. Additionally, I understand a withdrawal is a taxable event and may be subject to a government-imposed 10 percent penalty tax for early withdrawal. I understand the amount I request may not include any employer contributions which are used to satisfy IRS special nondiscrimination tests for 401(k) plans and any investment earnings on my post-1988 elective pre-tax deferrals. Further, the amount I request may not be repaid to the plan and must be for a minimum [Insert minimum hardship amount if any]. A financial hardship withdrawal may be granted for one of the following reasons (please check the appropriate item and supply the requested documentation): o Purchase (excluding mortgage payments) or construction of my principal residence; documentation = copy of executed purchase agreement or builder s contract o Tuition, room and board fees for the next twelve months for college or other post-secondary education for me, my spouse, my children, dependents or beneficiaries; documentation = copy of tuition bill o Unreimbursed medical expenses or the amount needed to obtain medical services for me or my dependents or beneficiaries; documentation = copy of bills indicating the amount not covered by insurance o Preventing of eviction from or mortgage foreclosure on my principal residence; documentation = copy of eviction or foreclosure notice o Payments for burial or funeral expenses for my deceased parent, spouse, children, dependents or beneficiaries; documentation = funeral/burial bills showing that I am the responsible party and a statement indicating the amount of life insurance on the deceased o Expenses for the repair of damage to my principal residence that would qualify for the casualty deduction; documentation = Repair bills for damage to my principal residence that would qualify as a casualty deduction P a g e 33

34 Required Minimum Distribution (RMD) Overview RMDs are those distributions that must begin no later than the required beginning date (RBD) and should be distributed over the life of the participant or the joint lives of the participant and his/her beneficiary. Q: What is the required beginning date? A: The required beginning date for any participant who is not a more than 5 percent owner is April 1 st following the later of: The calendar year in which the participant attains age 70½ The calendar year in which the participant retires The required beginning date for a participant who is a more than 5 percent owner is: April 1 st following the calendar year in which the participant attains age 70½ even if still employed If an employee is a family member of a more than 5 percent owner, then such family member is also considered an HCE. Family members include the spouse, parents, children and grandparents. Family members for this purpose do not include grandchildren, siblings or in-laws. Plans are permitted to mandate that the required beginning date for all participants is April 1 st following the calendar year in which the participant attains age 70½; therefore, it is important to review your plan document/adoption agreement. Q: Are there exceptions? A: Yes. The following do not have the more than 5 percent owner rule: Governmental and church plans IRAs Q: Which plans are subject to RMDs? A: The following types of plans are subject to the RMD rules: Qualified plans under Code 401(a) Individual retirement accounts under Code 408 Tax deferred annuity plans under Code 403(b) Eligible deferred compensation plans under Code 457 Q: Will I be notified about participants who are required to take an RMD? A: Yes, your annual report contains an Age 70.5 Report. The Age 70.5 Report indicates participants who have attained age 70½ during the current plan year or previous plan years that must begin taking RMDs. Upon receipt of the annual report, we suggest that you contact your plan services consultant to determine which participants indicated on the 70.5 Report must receive an RMD in the current plan year. Remember, the 70.5 Report indicates individuals who attained 70½ in the current and previous plan years; therefore, there may be individuals who have made arrangements to receive a recurring RMD. You will not need to contact them. Your plan services consultant can assist you in identifying: Individuals required to take their first RMD Individuals who turned 70½ in a previous plan year and did not elect a recurring RMD who you will need to contact Q: Will I receive any other type of notification or reminder regarding RMDs? A: Typically we run recurring articles in the Plan Sponsor Monthly as a reminder that RMD payments are due to be paid by December 31. For participants who did not request automatic RMD payments, the completed RMD form must be received by AUL no later than October 31, to ensure the distribution is paid by the December 31 deadline. P a g e 34

35 Q: How are participants who must take an RMD notified? A: Participants who turned 70½ during the calendar year will receive a letter notifying them of the RMD requirement. The participant may choose one of the following options: Request automatic recurring RMD payments that will be calculated and sent each year Request installment payments throughout the year that equal the amount necessary to satisfy the RMD requirement Request a one-time RMD payment that will satisfy the requirement for the current year only The participant will receive notification from AUL only in the year in which they turn 70½. If the participant does not choose an automatic recurring payment, the participant must contact the AUL Participant Service Center annually to obtain an RMD. They will not receive future notifications. Q: How are RMDs calculated? A: The amount of the RMD is determined by dividing a participant s account balance by the applicable distribution period. The account balance used is the account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year. For purposes of RMD calculations, IRAs can be aggregated with other IRAs of the account holder and 403(b)s can be aggregated with other 403(b)s of the participant. Q: Who is a designated beneficiary? A: A participant s designated beneficiary is any person designated as a beneficiary by plan provisions or by an employee executing a formal election. It is not a person designated by a will or by operation of law. Q: What are the rules regarding designated beneficiaries? A: Only a person may be designated beneficiary. An estate, charity or trust cannot be a designated beneficiary. However, if a trust is named as a beneficiary, the trust s beneficiaries will be treated as the participant s designated beneficiaries as long as the trust meets certain requirements. Q: How are designated beneficiaries determined? A: A designated beneficiary is determined based on the beneficiaries designated as of the date of death who remain beneficiaries as of September 30 of the calendar year following the calendar year of the participant s death (the beneficiary determination date) except: If the spouse is the sole designated beneficiary as of the beneficiary determination date, and the spouse dies after the participant but before distributions have begun, the relevant beneficiary is the surviving spouse s designated beneficiary. If the designated beneficiary dies prior to the beneficiary determination date, the plan continues to treat the deceased beneficiary as the beneficiary for determining the distribution period. If a participant has multiple designated beneficiaries, the beneficiary with the shortest life expectancy will be the designated beneficiary for purposes of determining the distribution period. Any beneficiary eliminated by distribution or disclaimer is disregarded for determining the participant s designated beneficiary. P a g e 35

36 Pursuant to the 2004 Final Regulations regarding RMDs, if separate accounts are established by the end of the calendar year following the year of an employee s death, the separate accounts can be used to determine required minimum distributions for the year following the year of the participant s death. Postdeath investment experience must be shared pro-rata until separate accounts are established. Q: What happens if a participant dies after their required beginning date? A: If distributions have begun before a participant s death the distribution period is as: If there is no beneficiary designated: The balance is distributed over the participant s remaining life expectancy. The remaining life expectancy is the participant s un-recalculated life expectancy determined under the Single Life Table using the participant s attained age in the year of death reduced by one for each calendar year thereafter. If the designated beneficiary is not a spouse: The distribution period is the greater of the participant s remaining single life expectancy or the designated beneficiary s remaining single life expectancy. This is based on the age of the beneficiary in the calendar year following the calendar year of the participant s death. The plan determines the applicable distribution period under the Single Life Table of Treasury Regulation 1.401(a)(9)-9, A-1 reducing the applicable distribution period by one for each calendar year thereafter. A nonspousal designated beneficiary may roll over the account balance less the RMDs for the participant due in the year of death and the RMDs for the beneficiary in subsequent years, to an inherited IRA. The RMD rules for the plan covering the deceased participant apply to the inherited IRA. If the designated beneficiary is the surviving spouse: Each year, the plan re-determines the applicable distribution period using the greater of the participant s remaining single life expectancy or the spouse s remaining single life expectancy. Eventually, even the RMD to an older spouse could be calculated on the spouse s life expectancy because the spouse s life expectancy is re-determined annually based on the spouse s current age, while the participant s remaining life expectancy is based on the participant s life expectancy in the year of death. A surviving spouse designated beneficiary may roll over the account balance except for the participant s RMD due in the year of death. Following the rollover, the rolled amount becomes subject to the spouse s RMD requirements. Payments made from the plan prior to the participant s required beginning date are not treated as RMDs. Q: What happens if the participant dies before the required beginning date? A: If the participant dies before the RBD: If the designated beneficiary is the surviving spouse: A surviving spouse may postpone commencement of distribution of the participant s account balance until the participant would have attained age 70½ if the spouse is the sole designated beneficiary. If the designated beneficiary is not a spouse or an individual is indicated in addition to the spouse: Distributions must commence by the end of the calendar year immediately following the calendar year of the participant s death. If there is no beneficiary designated: The entire account balance must be distributed by the end of the calendar year that includes the fifth anniversary of the employee s date of death. P a g e 36

37 Fidelity Bonds Section 412 of the Employee Retirement Income Security Act of 1974 (ERISA) requires that fiduciaries and other persons who handle or are responsible for the assets of a qualified plan or a 403(b) plan subject to ERISA be bonded. Q: What is the purpose of the bond? A: The bond is to reimburse the plan if any plan assets are lost through the fraud or dishonesty of persons handling plan funds. Fraud or dishonesty may include one or more of the following acts: Theft Forgery Embezzlement Misappropriation Willful misapplication Q: Who must be bonded? A: Every person who handles funds or other property of an employee benefit plan (i.e., a plan official) is required to be bonded unless covered by an exemption. Plan officials generally include the plan administrator and officers and employees of the plan or plan sponsor who handle plan funds because of their responsibilities for the receipt, safekeeping and distribution of funds. If a plan official is an entity, such as a corporation, the bonding requirements apply to the natural persons who perform the handling function. For the purpose of bonding provisions, the terms administrator, officer or employee also include persons indirectly employed or otherwise delegated to perform such work for the plan who perform handling functions for the plan. Q: What does handling plan assets mean? A: A person is considered to handle plan assets whenever his or her duties or activities are such that there is a risk that the assets could be lost because of his or her acts of fraud or dishonesty. This includes relationships that involve access to plan assets or decision-making powers regarding plan assets that could give rise to such a loss. Q: What are some examples of persons who have to be bonded? A: The requirement for bonding an individual is based on whether that person actually handles or has access to plan assets. Federal regulations require that individuals be bonded who have: Physical contact with cash, checks or similar plan property unless close supervision or the nature of the property makes the risk of loss negligible. For example, a trustee who receives contributions and dividend checks for the plan would have to be bonded. However, a clerical person who only tabulates and delivers plan deposits to the bank and who is closely supervised would not have to be bonded. Ability to take possession of cash, checks or other property because of access to the assets. For example, a person whose signature would be honored on a plan asset account even if such person has not been given permission to make withdrawals from the asset account would have to be bonded. Power to transfer plan property (mortgages, titles to land and property or securities) to themselves or negotiate such funds for value. For example, a plan sponsor who can sign over the title to plan property to themselves would have to be bonded. Authority to disburse plan funds, including those persons who actually disburse the funds and those persons who authorize or direct disbursements. For example, a trustee who directs disbursements or an office manager who writes cash disbursements to participants form the plan s checking account would have to be bonded. Power to sign or endorse checks or similar instruments. For example, a trustee of plan who endorses and reinvests dividend checks back to the plan would have to be bonded. Supervisory responsibility with regard to the activities described above if the possibility of P a g e 37

38 a loss to the plan due to fraud or dishonesty of the supervisor exists. We may be seen as handling plan assets; however, because AUL is an insurance company regulated by state authority, we are not required to have a fidelity bond. Q: How can I track who needs to be bonded? A: Are any of the following persons performing functions described in the previous question for your plan? Those marked Yes must be bonded. Yes No Plan sponsor Plan trustee(s) Office manager You Human resources director Plan Committee Other Q: What amount of bond is necessary? A: Every individual must be bonded for at least 10 percent of the amount of plan funds he or she handles up to a maximum of $500,000 ($1,000,000 if the plan holds employer securities), but in no case less than $1,000. A blanket bond may be purchased that covers all persons who handle funds. The amount of funds considered to be handled by each person shall be the total funds subject to risk of loss through acts of fraud or dishonesty by such persons during the preceding year. The amount of the bond must be determined at the beginning of each plan year. Q: How do I get a fidelity bond? A: To obtain the necessary bond, contact your casualty agent and ask about an ERISA fidelity bond for your plan. Provide your agent a list of the persons to be bonded and the amount of coverage required for each individual. The bond must be one that reimburses the plan from the first dollar of loss up to the full amount for which the person causing the loss is bonded. The bond must provide a period of no less than one year after termination or cancellation in which to discover a plan loss. It may be a blanket, schedule or individual bond. Q: What if I choose not to buy a bond? A: The law states that it is unlawful for any plan official to receive, handle, disburse, or otherwise exercise custody or control of any plan assets without being bonded. Your bonding information is required to complete the Form 5500 series return filing that is submitted to the DOL. Q: Is a fidelity bond the same as fiduciary liability insurance? A: No. A fidelity bond is designed to reimburse the plan if any plan assets are lost through the fraud or dishonesty of persons handling plan funds. Under ERISA, fiduciaries may be personally liable for breach of certain responsibilities and subject to civil court action. With this in mind, you may want to consider fiduciary liability insurance that may provide a measure of protection for fiduciaries. Q: How can I obtain additional information about fidelity bonds? A: For more information, contact your plan services consultant or casualty agent. In addition, there is a DOL approved list of surety companies for ERISA fidelity bonds which can be found at Department of the Treasury s Listing of Approved Sureties (Department Circular 570. P a g e 38

39 Loan Administration Loan Provisions Some plans allow an actively employed participant to borrow funds from their account. Q: How can I add the ability to take loans from my plan? A: A plan amendment and loan procedures are required. Please contact your plan services consultant for assistance. Q: What options are available for loans? A: The following loan options are available and are outlined in your Loan Procedures: Conditions under which loans can be obtained Maximum number of loans allowed by a participant If multiple loans allowed, the period of time required between the issuance of the previous loan and a new loan (e.g., 12 months) Sources available for loans (e.g., elective deferrals, rollover, employer match, etc.,) Interest rate on loans Repayment frequency Q: Are loan options outlined in my adoption agreement? A: No. Your adoption agreement will indicate whether or not loans are allowed. The loan options will be outlined in your Loan Procedures. Q: Can I amend my plan to discontinue loans? A: Yes. Loans are not a protected benefit. However, you may not require that existing loans be paid early. You may only discontinue the issuance of new loans. Q: Can I amend my loan procedures? A: Yes. Loan procedures may be amended in writing. On the date the new loan procedures are adopted, all prior loan procedures are superseded. Loans taken from the plan prior to the date new loan procedures are adopted shall continue according to the loan procedures in effect at the time the loan was granted. Please contact your plan services consultant for assistance with amending your loan procedures. Q: What are the conditions under which loans may be granted? A: You may choose to allow loans for one of the following options: For any purpose For restricted reasons (outlined by you) For safe harbor hardship distribution reasons only For more information on safe harbor hardship distribution reasons see Hardship Withdrawal Overview. Q: How do I choose the interest rate to use for loans? A: The rate of interest should be reasonable and comparable to the rates charged by lending institutions in your geographic locale. The prime lending rate plus 1 percent (prime +1) has been deemed an acceptable standard for participant loans. You should make a practice of reviewing your loan interest rate on a regular basis to ensure that the rate is reasonable. Interest on loans is paid to the participant s account. Q: How can I change the loan interest rate? A: You can change the interest rate for future loans by choosing Update Loan Interest Rate under the Administration tab on the esponsor website. Interest rate changes take one to two business days to process. A change in interest rate applies to new loans only. Existing loans carry the same original rate of interest throughout the term of the loan. P a g e 39

40 Q: How much can a participant borrow? A: In general, the minimum amount is $1,000 and the maximum amount is 50 percent of the vested account value up to $50,000. The maximum loan amount may be restricted to certain sources (as outlined in your loan procedures) and reduced by other outstanding loans. Q: Can a participant borrow more than 50 percent of his or her vested account balance? A: No. All loans must be adequately secured. The plan may not make loans that require security other than the participant s vested interest in the plan. Q: What is the term of the loan? A: The loan duration must be for at least one year but not more than five years. Loans for the purchase of a primary residence may be from one to thirty years. The participant should provide any supporting information that you deem necessary. Loan Origination and Repayments Participants may complete loan applications via the Account Services website or through TeleServe. You may assist participants applying for a loan via the esponsor website If your Loan Procedures allow loans for safe harbor hardship reasons only, loans are available only through the esponsor website. Q: How are loan proceeds distributed? A: If the plan is not subject to spousal consent rules, the default method of distributing loan proceeds requested by participants via Account Services and plan sponsors via esponsor is direct deposit. However, participants will have the option to receive a check. If a plan is subject to the spousal consent rules, participants will not see an option on Account Services to receive loan proceeds via direct deposit. Participants must continue to receive paper checks for loan proceeds and you, the plan sponsor, must obtain the required spousal consent documents. Regardless of whether or not the plan is subject to spousal consent rules, all plan sponsors will have the option to direct distribution of loan proceeds via direct deposit or paper check when requesting a loan via esponsor. If applicable, you will be receive a reminder to obtain the signed spousal consent form. If you are using AUL's loan procedure documents, you should have received a Loan Addendum reflecting the direct deposit feature. Q: What type of loan information is available on the Account Services website for participants? A: Plan participants can select from the following options under the Loan Center: Loan Calculator - Model and/or request a loan. Loan Summary - View loan information such as interest rate, loan balance, next payment date, etc. Loan Payoff Projection - Determine the amount due if the participant wants to pay off his/her loan early. Loan Specifications - To view the loan specifications of the plan. Loan FAQs - To view the loan terms and conditions and a listing of frequently asked questions. Q: Is there a fee for taking a loan? A: Most plans require a one-time processing fee of $75 from the participant s account to originate each loan. In addition, most plans are subject to a $24 annual loan administration fee that will be deducted from the participant s account at $6 per quarter for the life of the loan. P a g e 40

41 Refer to the plan s Summary Plan Description for participant loan fees specific to your plan. The $6 loan administration fee is not deducted for partial quarters. For example, a loan distributed on January 15 would not have a $6 loan administration fee deduction until June 30, the last day of the first full quarter the loan is in effect. Similarly, if a loan is paid off in the middle of a quarter, the administration fee is not deducted for that quarter. Q: What type of documentation is required? A: If the plan is subject to qualified joint and survivor annuity rules, a participant must complete a Spousal Consent form (available on esponsor). The plan administrator or notary public must witness the signature of the participant and spouse. An unmarried participant should indicate his or her marital status on the form. The plan administrator should retain the executed Spousal Consent form. If the plan is not subject to qualified joint and survivor rules, no documentation is required of the participant and plan administrator. If the plan allows loan distributions for hardship reasons only, the participant should complete a Loan Worksheet and present to the plan administrator. The plan administrator should retain the Loan Worksheet in the plan s files and then process the loan request via esponsor. Q: What will the participant receive? A: Loan documents will be available on the Account Services and esponsor websites after the loan has processed. These documents include the following: Loan Repayment Schedule Promissory Note and Security Agreement Q: How are loan repayments made? A: Loan repayments should be made via payroll withholding starting beginning with the first repayment date listed on the participant s amortization schedule. Q: Can loan repayments be suspended? A: Yes, loan repayments can be suspended due to: Approved leave of absence reasons other than military service Leaves of Absence for Military Service Q: How long can repayments be suspended with an approved leave of absence? A: Loan repayments can be suspended for up to one year if the borrower is: Without pay Being paid at a rate of pay (after income and employment taxes have been taken) less than the amount of the repayment required by the loan during the duration of the leave If a leave of absence lasts longer than one year, loan repayments will become due on the first anniversary of the leave of absence. Q: How does the participant resume repayments after a return from an approved leave of absence? A: After a participant returns from a leave of absence, the remaining balance on the loan will be paid off using one of the two following methods as determined at the time repayments resume: The loan will be re-amortized so the loan will be repaid not later than five years after the date of the original loan (unless the loan is for a principal residence). The re-amortization of the loan balance cannot result in repayments being less than repayments required prior to the leave of absence. Contact your plan services consultant for assistance with reamortizing a loan. The loan repayments will resume after the leave of absence in the same amounts as required before the leave of absence. At the end of the loan term, as determined at the time the loan was made, the remaining loan balance will be due in full. P a g e 41

42 Q: What if participant is on leave of absence for military service? A: Loan repayments may be suspended under the plan if a participant takes a leave of absence from the employer because of service in the military and does not receive a distribution of his or her account. Such time period shall not be taken into account as part of the loan period even if the length of military service is greater than the original term of the loan. Q: How does the participant resume repayments after return from leave of absence due to military service? A: After a participant returns from a leave of absence due to military service, the remaining balance on the loan will be paid off using one of the two following methods as determined at the time repayments resume: The loan will be re-amortized so the loan will be repaid not later than five years after the date of the original loan (unless the loan is for a principal residence). The re-amortization of the loan balance cannot result in repayments being less than repayments required prior to the leave of absence. The loan repayments will resume after the leave of absence in the same amounts as required before the leave of absence. At the end of the loan term, as determined at the time the loan was made, the remaining loan balance will be due in full. Q: Can a participant pay off a loan early? A: Yes. Full and partial prepayments are permitted; however, loans may not be consolidated or refinanced. Please note that the outstanding loan balance and the loan payoff amount are usually different. Please use the loan payoff projection option on esponsor to determine the payoff amount. Q: Can a participant submit full loan payoffs to AUL? A: Only the employer may remit scheduled loan repayments to AUL; however, borrowers may send full loan payoffs (only) directly to AUL provided all of the following conditions are met: The payoff is in the form of a certified bank check, a cashier s check or money order. The borrower notifies the employer of the loan payoff and requests that loan repayments be discontinued. The borrower provides his/her name, plan number, and loan number with the payoff. Defaulting Loans A loan that is in default is generally treated as a taxable distribution from the plan of the entire outstanding balance of the loan. Q: When is a loan considered to be in default? A: A default of a loan may exist upon any of the following: Failure to make payment by the end of the repayment grace period. Failure to maintain an automatic after-tax payroll deduction repayment arrangement, except for approved leaves of absence, provided a leave of absence (for reasons other than military service) does not last longer than one year and the borrower is either without pay or is being paid at a rate of pay less than the amount of the repayment required by the loan during the duration of the leave. A warranty or representation made by the participant which is false or is believed to be false by the plan administrator. The death of the borrower. The required spousal consent to the borrower s use of his or her accrued benefit in the plan to secure the borrower s loan obligation, if required, is revoked or otherwise becomes invalid or inoperative. 42 P a g e

43 Interruption of the borrower s status as a partyin-interest with respect to the plan. Termination of employment when the loan is not repaid in full, except for approved leave of absence. Failure to make payment at the end of one year of an approved leave of absence for reasons other than military service. Q: Can a loan default be considered an inservice withdrawal? A: If the plan permits in-service withdrawals for participants who have attained age 59½ and qualify for such withdrawal, a defaulted loan will be deemed an in-service withdrawal to the extent available to cover the loan. This withdrawal is subject to personal income tax. Q: What happens after I report a loan as defaulted? A: The status of the loan will be changed to: Offset for terminated participants Deemed Distribution for active participants not making loan repayments In addition, AUL will issue a 1099-R to the participant for the balance of the loan including outstanding interest. The annual report for your plan contains a Participant Loan Summary section. The Loan Activity section includes a column for Deemed Distributed Amounts reflecting deemed distributions for actively employed participants and loan offset amounts for participants who terminate employment with an outstanding loan balance. The summary at the end of the report separates loan offset amounts from deemed distribution amounts. consultant so the loan status can be updated prior to resuming repayments. A loan that has been offset due to termination may not be repaid. Q: What is my responsibility as plan administrator? A: In general, you are responsible for the following: Setting the interest rate for new loans. Obtaining spousal consent if the plan is subject to the joint and survivor annuity requirements. Requesting and verifying participants supporting documentation if your plan allows loans for safe harbor hardship reasons only. Requesting and verifying participants supporting documentation if a loan is taken for a period of time of greater than five years, which is allowed only if the loan is for the purchase of a primary residence for the participant. Ensuring your payroll is set up to take aftertax payroll deductions for loan repayments. Ensuring timely loan repayments. Processing loan defaults via esponsor. Notifying participants, as needed, of the personal income tax and potential penalty tax consequences of a loan default. Q: Are there tools available to assist me? A: The Loan Center tab on esponsor provides tools to calculate loan amounts, view a summary of all outstanding loans, calculate loan payoff amounts, view the plan s loan specifications, view and authorize default of delinquent loans, and answers to frequently asked questions (FAQ s). Q: What happens if an active employee with a defaulted loan begins making repayments again? A: If a participant wishes to resume repayments for a deemed distributed loan, contact your plan services 43 P a g e

44 Q: What is in the Loan Summary? A: The Loan Summary allows you to view the details of all loans for participants with current outstanding and repaid loan balances to include the following information: Loan ID (loan number) Loan status Origination date Last payment date Payoff date Interest rate Original loan amount Outstanding balance* Loan repayment history for a particular loan by clicking on the Loan ID * Access the Loan Payoff Projection to calculate the amount required to pay off a loan in full. Q: What are the different types of loan statuses on the Loan Summary? A: One of the following statuses will be listed for each loan: Active: Loan has an outstanding balance and is subject to repayments. Normal Payoff: Loan has been paid-off. Deemed Distributed: You have indicated that the loan should be considered distributed because repayments were not made in accordance with your plan s loan provisions. The participant received an IRS Form 1099-R for the year in which the loan was considered a deemed distributed. The loan will continue to appear on the participant s quarterly statement as DDD (deemed distributed) for as long as they have an account balance unless loan repayments are resumed. Offset Deemed Distributed - The participant terminated employment with a loan that was in Deemed Distributed (DDD) status. Active Deemed Distributed - Participant s loan was previously Deemed Distributed (DDD) status but the status changed because the participant resumed repayments. Repaid Deemed Distributed- Loan was previously Deemed Distributed (DDD) status; however, it is now paid off. Q: What is in the Loan Delinquency Report? A: The Loan Delinquency Report provides a listing of participants with no repayments in the last 90 days and a listing of participants with no repayments in the last 30 days. The following action should be taken: 90 Day Delinquent Loan Listing: If you agree that the participant(s) listed have discontinued loan repayments, indicate the date of default. If you do not agree that the loans for the participants should be defaulted, contact your plan services consultant for further discussion. 30 Day Delinquent Loan Listing: If the participant is currently employed, you should research why no loan repayments were sent to AUL during the last 30 days. You should then contact your plan services consultant for options about how to address. If the participant is terminated, you should enter the date of default for the loan. Additional Information Additional information is available to help you administer plan loans efficiently. Q: What type of loan information is available on the esponsor website? A: The Loan Center contains many features to help you administer plan loans via the web including the following options: Loan Calculator - Calculate the amount of loan repayments by entering a loan amount, interest rate and duration of the loan. After selecting Calculate, you have the option of applying for the loan or recalculating with different variable data. 44 P a g e

45 Loan Summary - View details of all participants with loans, loan status, origination date, last payment date, payoff date, interest rate, original loan amount, outstanding balance and the payment amount. You may also click on a loan number to view loan repayment history for a particular loan. Loan Payoff Projection - Determine the amount due if a participant wants to pay off a loan early. Loan Specifications - View details of the loan provisions of your plan including whether or not loans are allowed, the loan interest rate, loan processing fee, minimum and maximum loan amount allowed and the maximum number of loans allowed. Loan FAQs - View loan information in a question and answer format. Delinquent Loans - View the Loan Delinquency Report which you may use to automatically notify AUL of defaulted loans. Q: What other type of loan information will I receive? A: You will receive the following information regarding loans: quarterly Plan Sponsor Report that contains loan repayment information. Annual Report that contains a participant loan summary. See Contributions and Reports for additional information. 45 P a g e

46 Reports AUL routinely provides reports to you that reflect the activity that occurred in your plan. Reports are delivered via our esponsor website and/or are mailed directly to you and/or your participants. For more information on reports and functionality available on esponsor, see Plan Sponsor Online Support. Confirmations We will generate and post the following as they occur: Address Change Confirmations Participant Confirmations Rollover Confirmations Transfer Confirmations The participant should review for accuracy and notify the AUL Participant Service Center at if they are any questions. Q: What is a rollover confirmation? A: A Rollover Confirmation is sent to the participant any time a rollover contribution is received. The report indicates the Investment and Rollover Amount by investment option. Q: What is an Address Change Confirmation? A: An Address Change Confirmation is mailed to the participant any time an address is changed. The confirmation is mailed both to the new and old address. The participant should review for accuracy and notify you if he/she has any questions. Q: What is on the Participant Confirmation? A: Participant Confirmations shows: Hire Date Date of Birth Investment Elections and the date for which elections apply to contributions (e.g., For Contributions Received On or After MM/DD/YYYY) Source (e.g., All, Deferrals, Employer Match, etc.,) Investment (e.g., AUL Fixed Fund) Prior investment percentage (e.g., 50 percent) New investment percentage (e.g., 25 percent) The participant should review for accuracy and notify the AUL Participant Service Center at if there are any questions. Q: What is a Transfer Confirmation? A: A Transfer Confirmation is mailed to a participant any time there is a transfer between investment options. The report will show: The effective date of the transaction The source (e.g., Deferrals) Investment From and To Dollar Amount Equivalent Units The participant should review for accuracy and notify the AUL Participant Service Center at if there are any questions. 46 P a g e

47 esponsor Financial Details The Financial Details tab allows you to select a beginning and ending period of time to view activity by: Account Activity Asset Allocation Contribution Detail Contribution by Category Distribution Detail All reports can be printed or downloaded. Q: What is the Account Activity report? A: The Account Activity report allows you to select a period of time to view: Contributions Other additions Loan repayments Distributions Other deductions Investment gain Fees Q: What is the Asset Allocation report? A: The Asset Allocation report allows you to select a period of time to view each investment option and includes: Investment sources (e.g., Deferrals, Match) Number of participants Dollars invested Q: What is the Contribution Detail report? A: The Contribution Detail report allows you to select a period of time to view by source or by investment a summary that will display: Trade date Payroll date Amount allocated Q: What is the Contribution by Category report? A: The Contribution by Category report allows you to select a period of time to view contributions by investment option. Report displays: Investment option name Investment type Contribution value Q: What is the Distribution Detail report? A: The Distribution Detail report allows you to select a period of time to view: Details of withdrawal (name, date, amount, check number) Type of withdrawal (i.e., rollover or cash) Reason for withdrawal Reactivation date (if hardship withdrawal) 47 P a g e

48 Q: What are the reasons for withdrawal on the Distribution Detail report and where can I find more information. Reason Detail/Additional Information Disability Term Distribution to a participant who has become disabled. Excess Aggregate Contrb Excess Annual Additions Excess Contribution Excess Deferral Final Installment Payment Hardship In Service Wdrl Your plan document outlines the guidelines considered for disability. Distribution of the amount by which matching contributions and voluntary employee contributions made on behalf of highly compensated employees exceeds the amount permitted by the ACP test. Distribution of the amount by which total contributions made to a plan exceed the annual additions limit. Distribution of the excess of the elective contributions (including qualified non-elective and matching contributions that are treated as elective contributions) made to a 401(k) plan on behalf of highly compensated employees for the plan year over the maximum amount of such contributions permitted under the ADP test for such plan year. The amount by which elective deferrals made on behalf of an employee by all employers exceeds the annual cap in effect for that taxable year [402(g) deferral limit]. Continuing or final payment of an agreement to make periodic distributions to a participant, as allowed in the plan document or contract. Some plans allow for a distribution to an actively employed participant if a hardship is demonstrated such as: Purchase of primary residence Payment of tuition, room and board and related educational fees Unreimbursed medical care expenses Prevention of eviction from principal residence Payment of burial or funeral expenses Expense for the repair of damage to the employee s principal residence that would qualify as a casualty deduction For more information see Hardship Withdrawal Overview. Some plans allow an actively employed participant to withdraw part of their vested balance prior to reaching age 59½. This money is usually from after-tax accounts, but rollover money may also be eligible for withdrawal. The participant may be subject to a 10 percent early withdrawal penalty as well as the mandatory Federal 20 percent withholding tax. Some plans allow an actively employed participant to withdraw part of their balance after reaching age 59½. Participants may be able to withdraw their vested money without incurring the 10 percent early withdrawal penalty; however, the distribution might still be subject to the 20 percent withholding tax. 48 P a g e

49 Installment Payment Minimum Distribution Periodic distribution to a participant as allowed in your plan document. An RMD is a mandatory distribution (with limited exceptions) made to participants who are 70½ years of age. Participants who own 5 percent or less of the plan sponsor company might be able to delay their RMDs until they retire. Your plan document will specify when participants must begin receiving RMDs. The first distribution must occur by April 1 st of the year following the year in which a participant reaches age 70½ (and, if applicable, has retired). Subsequent annual distributions must be made by December 31 st. Premature Exception Qual Domestic For more information see Required Minimum Distribution (RMD) Overview. In-service distribution from a 457 plan that is requested by the participant as an emergency withdrawal. A qualified domestic relations order (QDRO) is a domestic relations order (DRO) that creates or recognizes the right of someone other than a participant to receive all or part of the participant s benefits under a pension plan. QDROs are often associated with divorce settlements. Retirement Term-Death Term With Cause Voluntary Term For more information see Qualified Domestic Relations Orders (QDROs) Overview. Distribution made to a participant when the specified normal retirement age is reached (usually age 65) according to your plan document. Distribution made to a participant who has not met the normal retirement age as defined in your document but the plan allows retirement at an earlier age without losing any benefits. Distribution made to the participant s beneficiary. This amount is paid either as: A lump sum payment paid to the participant s beneficiary or estate A rollover to another retirement plan or IRA for the benefit of the beneficiary A Qualified Pre-Retirement Survivor Annuity (QPSA) if your plan allows. For more information about QPSAs, see Qualified Pre-Retirement Survivor Annuity (QPSA)/Qualified Joint Survivor Annuity (QJSA) Overview Mandatory cash-out distribution made to a former participant who has not requested a payout of his or her account balance. Distribution made to a former participant who leaves active employment for reasons other than retirement, disability or death. 49 P a g e

50 esponsor - Loan Center You may view, download and print the following any time via the esponsor website under the Loan Center tab: Loan Summary Delinquent Loans Q: What is the Loan Summary report? A: The Loan Summary lists all participants with loans, loan information and loan activity. Loan information includes: Loan Number Loan status Origination or takeover date (for plans that transitioned loans to AUL from another carrier) Last payment date Payoff date Frequency of Repayments Original or Takeover Loan Amount Interest Rate Maturity Date Outstanding balance Loan Activity includes: Beginning Principal Balance Current Year New Loan Loan Repayments (principal and interest) Deemed Distribution amounts (principal and interest)* Reamortization/Reactived Deemed (principal and interest) Ending Principal Balance *Deemed Distribution amounts reflect deemed distributions for actively employed individuals who are delinquent with loan repayments. If a participant terminates with an outstanding loan, amounts will be reflected as loan offset. There is a summary at the end of the report that rolls up the loan activity. In the summary, loan offset amounts are separated from deemed distribution amounts. Q: What is the Delinquent Loan report? A: You may use the Delinquent Loan reports to automatically notify AUL of defaulted loans. esponsor Participant Data You may view, download and print the following any time via the esponsor website under the Participant Data tab: Participant Account Activity Participant Statements Participant Data Beneficiary Information Pending Transactions MCO Ineligible Participants MCO Status Overview Report Q: What is the Participant Account Activity report? A: The Participant Account Activity report allows you to view a participant s activity for a selected period of time. Summaries of activity are in two formats by: Contribution Source Investment Option 50 P a g e

51 Q: What is the Participant Data report? A: The Participant Data report allows you to view personal data such as name, status, employment date, date of birth, address and vesting information by source. You will see a list that reflects all participants. Click on the participant to view: Personal Data Source Information Account Balance information Q: What is the Beneficiary Information report? A: The Beneficiary Information report allows you to view beneficiary designations by participant. Q: What is the Pending Transactions report? A: The Pending Transactions report displays scheduled transactions by participant name, SSN, division, transaction type, requested by and action. Q: What is the MCO Ineligible Participants report? A: The MCO Ineligible Participants report shows all participants that are eligible for MCO but we do not have a complete address on file. You should use this report to update participant addresses so that MCO processing can be completed. Q: What is the MCO Status Overview report? A: The MCO Status Overview report displays the status of each MCO by participant and the projected date of payout. Q: What reports are available on esponsor under the Plan Reports tab? A: You may view, download and print the following any time via the esponsor website under the Plan Reports tab: Payroll Feedback File Plan Entry Automatic Contribution Report (if applicable) Participant Auto Enrollment Report (if applicable) Beneficiary Designation Address Changes/eActivity Missing Address Participant Summary Report Transaction Summary Participant Election Default Reports Annual Reports Annual Plan Review Advisor Fee Report Advisor Statistics Q: What is the Payroll Feedback File? A: The Payroll Feedback File is a comprehensive report that can be downloaded for your use for both contributions and loans. The Contribution report displays: Enrollment and updated contribution elections Deferral changes due to hardship withdrawals Automatic Contribution Arrangement data The Loan report displays: Loan initiation date Amount of loan Payment amount Term of loan Payment frequency Number of payments Total of payments Final payment date Deemed default date (if applicable) Reports are available on demand using the date range you select or you may also schedule your reporting with a selected date range and frequency you choose (e.g., weekly, monthly, quarterly). The scheduled request allows you to include additional people to be notified when the report is produced. Q: What is the Plan Entry report? A: The Plan Entry report reflects employees who have met the eligibility requirements to participate in the plan within 65 days. It includes: Employee name Social Security number 51 P a g e

52 Hire Date Source (e.g., Deferrals, Employer Match, Profit Sharing) Source Entry Date You should review the report for accuracy, notify the employee of his/her approaching eligibility and start enrollment preparation. Q: What is the Automatic Contribution report? A: If your plan has an automatic contribution arrangement (ACA), the Automatic Contribution report lists all participants that have been automatically enrolled into your plan. Once a participant makes a change to their account, whether changing their deferral elections or making a change in their fund elections, they will no longer show on the report as they will no longer be classified as ACA participants Q: What is the Participant Auto Enrollment report? A: The Participant Auto Enrollment report shows every participant that has been auto-enrolled into the plan. The participants on the report have not made an affirmative nor negative election to participate and have been enrolled at the deferral amount shown on the report. If an auto-enrolled participant makes a deferral change, whether to stop contributing or increase their contribution amount, they will no longer appear on this report. Q: What is the Participant Beneficiary Designation report? A: The Participant Beneficiary Designation report lists all participants and their status for updating beneficiary information. The report can be sorted by participants who have designed or not designated beneficiary designations. For employees who have designation beneficiary designations on-line full information can be obtained by downloading a full report. Use this data to encourage participants who have not designated a beneficiary to do so. Q: What is the Address Change/eActivity Report? A: The Address Change/eActivity report can be requested on demand for any time period you choose. The report shows: The date participants enrolled using Account Services or OneAmerica TeleServe The participant s Social Security number The participant s name Current deferral election (by percentage or dollar) Whether the initial request or change request was through Account Services, OneAmerica TeleServe or esponsor The action requested [e.g., enrollment (new), update information (change), etc.,] What information was updated if applicable (e.g., address) If the action requested says "paper", the employee indicated they had completed paper enrollment. This action directs the participant into their account and out of the enrollment module. "Paper" does not indicate that a participant submitted the form or AUL has received a form. Please verify with the employee that they completed their enrollment. For any new enrollment, download this report so that you can upload your employee deferral percentage/dollar amount to your payroll system to begin employee deferrals to the retirement savings plan. For deferral changes, confirm the frequency your plan document allows changes to deferrals and, based on your plan document guidelines, request a report using the appropriate dates to capture any employee deferral changes to upload to your payroll system. 52 P a g e

53 The default is set to monthly for you to receive the reminder . Please take advantage of the reminder feature that allows you to set the frequency you wish to receive an to check this report. Q: What is the Participant Missing Address report? A: The Participant Missing Address report lists all participants (both active and inactive) with an account who do not have a current address on file. Remember, address information is needed to send participant quarterly statements. You should contact the participants indicated and update address information via the Participant Data tab by selecting Update Participant Personal Data. Q: What is the Participant Summary report? A: The Participant Summary report is published quarterly and reflects activity by participant in the following categories: Beginning Balance Contributions Other Additions Transfers In and Out Loan Repayments Distributions/Other Deductions Investment Gain/Loss Ending Balance There are totals following the listing of individual participant accounts. Q: What is the transaction summary report? A: You will find summary quarterly reports and an annual report summary that provides an overview per participant of the contributions (by source) that a participant has made for the year. Report shows contribution amounts, loan payment totals, earnings, etc. Q: What is the Participant Election Default report? A: The Election Default Notice report notifies you that contribution dollars have been received for a participant who has not made investment option elections. The contribution for the participant has been invested in the plan level default investment option. There are two reports. Current Defaulted Participants and Defaults by Payroll Date You should run this report at least monthly and contact the affected participant and have him/her submit investment elections through OneAmerica TeleServe or the secure Account Services website. In addition, you should instruct the participant to utilize the transfer option to reinvest the defaulted dollars into their preferred investment election. For more information regarding Investment Elections and the default investment option, see Investment Elections. Q: What is the Annual Report? A: You may view, print, search and download your annual report. Also included is the cover letter and certification letter. Q: What is the Periodic Plan Review? A: If applicable, a plan review may include: plan review, investment review, fee disclosures, plan overview, compliance update and action plan. Q: What is the Advisor Fee report? A: The Advisor Fee report lists fees for a selected period of time. Q: What is the Advisor Statistics report? A: Report shows a plan summary of number of participants using the advisor service and a breakdown of participants utilizing each investment model and total asset value in each investment model. 53 P a g e

54 Q: What reports are mailed quarterly? A: AUL produces and mails the following each quarter: Participant Quarterly Statement Plan Sponsor Report Q: What type of information is included the participant quarterly statement? A: The participant quarterly statement includes: Outstanding loan activity Investment options Fund performance figures Account balance Gains and losses Contributions Withdrawals Transfers Personal rate of return For more information see One Day Is Today. Q: Who receives the quarterly statement? A: Each individual with an existing account balance will receive a statement regardless of employment status. Q: What is the Plan Sponsor Report? A: The Plan Sponsor Report is a summary, by division (if applicable), of all of the transaction activities of the plan for the quarter on a cash basis (i.e., no accrual activity is reflected). Transactions include: Contributions by source (e.g., Deferrals, Employer Match etc.,) Loan Payments Distributions/Other Deductions Investment Gain (Loss) The Report also reflects investment information such as: Investment of Total Plan Assets Plan Contributions for the Period Annualized Performance For more information see Understanding your plan sponsor statement. Q: What reports are mailed annually? A: AUL produces and mails the following each year: Annual Report Annual Disclosure Notice Q: What are the different components of the annual report? A: The annual report consists of the following sections: Participant Accounts Summary Financial Summary Report Qualified Pre-retirement Survivor Annuity Report (if applicable) Participant Service Credit Summary of Participants with Distributions (if applicable) Age 70.5 Report Participant Loan Summary Q: What is the Financial Summary Report? A: The Financial Summary Report reflects activity by investment or fund in the following categories: Beginning Accrual Balance Additions (e.g., contributions) Loan Repayments Earnings/Gain/Losses Deductions (e.g., withdrawals, fees, expenses) Corrective Distributions (e.g., refunds from failed compliance testing) Adjustments Ending Cash Balance Accrual Forfeiture Reallocations Accrual Contributions (contributions received after the end of the plan year for the previous plan year) Ending Accrual Balance 54 P a g e

55 There is also an Investment Summary by Source report that indicates the same information above that is broken down by contribution source (e.g., Deferrals, Employer Match, Employer, etc.,) as opposed to investment options at the end of the report. Q: What is the Qualified Pre-retirement Survivor Annuity Report? A: If applicable, the Qualified Pre-retirement Survivor Annuity Report indicates all individuals who have attained ages during the plan year who must be notified that they qualify for a pre-retirement survivor annuity (QPSA). For more information about QPSAs see Qualified Pre- Retirement Survivor Annuity (QPSA)/Qualified Joint Survivor Annuity (QJSA) Overview. Q: What is the Participant Service Credit Report? A: The Participant Service Credit report is a listing of all participants, their name, Social Security number, date of hire and years of service credit. If annual census data is not received, participants will automatically be credited with one year of service for vesting and eligibility purposes. Q: What is the Age 70.5 Report? A: The Age 70.5 Report indicates individuals who have attained age 70.5 during the plan year that must begin taking required minimum distributions (RMDs). For more information about RMDs see Required Minimum Distribution (RMD) Overview. Q: What is the Summary of Participants with Distributions Report? A: The Summary of Participants with Distributions report is a listing of participants who have taken a distribution during the plan year. The listing indicates: Name Social Security number Date of Distribution Amount Forfeited (if any) Total Participant Distribution The report also indicates the total number of participants with distributions during the plan year. Q: What is the Participant Loan Summary? A: The Participant Loan Summary lists all participants with loans, loan information, and loan activity. Loan information includes: Loan Number Origination or takeover date (for plans that transitioned loans to AUL from another carrier) Frequency of Repayments Original or Takeover Loan Amount Interest Rate Maturity Date Loan Activity Includes: Beginning Principal Balance Current Year New Loan Loan Repayments (principal and interest) Deemed Distribution amounts (principal and interest)* Reamortization/Reactived Deemed (principal and interest) Ending Principal Balance *Deemed Distribution amounts reflect deemed distributions for actively employed individuals who are delinquent with loan repayments. If a participant terminates with an outstanding loan, amounts will be reflected as loan offset. There is a summary at the end of the report that rolls up the loan activity. In the summary, loan offset amounts are separated from deemed distribution amounts. 55 P a g e

56 Q: What is my responsibility as Plan Administrator? A: Plan Administrators are responsible for reviewing the annual report and notifying AUL of any inconsistencies. In addition, you are responsible for notifying participants as applicable (e.g., QPSA eligibility). Q: What is the Annual Disclosure Notice? A: The Annual Disclosure Notice is sent to you as Plan Administrator and contains information on the Fixed Fund and applicable interest rate. 56 P a g e

57 Plan Sponsor Online Support OneAmerica.com The OneAmerica.com website is designed to support you and your employees every step of the way. The site provides: Easy access to accounts Concise and clear information about who we are and the products and services we offer Transparent paths to contact us Education resources Content is updated frequently; therefore, we encourage you to visit the website often. Q: How do I navigate within the website? A: When you visit you will see the following links: Financial Education Products & Services Careers About Us Search icon Login In addition, there are the following links: Contact Us Claims Find a Financial Professional Newsroom Financial Professionals Financial Education Businesses & Employers The Financial Education section of OneAmerica.com provides helpful education and tools for businesses/employers and individuals. The content is provided by all divisions of OneAmerica and spans the life stages a reader may encounter. Q: What information is available under Attract & Retain Talent? A: The Attract & Retain Talent section contains information and materials that support the idea that quality benefits program and promotion of the offerings can help attract talent to an organization and keep good employees with the company. Articles and videos include: The Employee Benefits Story What Employers Need to Attract Top Talent A Win-Win Approach to Retaining Key People Q: What information is available under Protect Your Business? A: The Protect Your Business section contains information and materials to assist you with staying in line with regulations and other issues related to offering benefits to your employees. Articles include: Developing an Employee Education Program Investment Policy Statement Best Practices Retirement Plan Fee Disclosure Requirements 57 P a g e

58 Q: What information is available under Maintain Your Plans? A: The Maintain Your Plans section contains information and materials to help you maintain benefits for employees and offers insight to help you to continue to provide quality benefits. Articles include: Timing of Retirement Plan Contributions Helping Your Participants Catch Up Basics of Automatic Plan Design Qualified Default Investment Alternatives Fiduciary Basics for Businesses Q: What information is available under Prepare for Transitions? A: The Prepare for Transitions section contains information and materials to help you through transitions you may face such as selling a business or changing benefit providers. Articles include: New Retirement Plan Provider Advantages of an Employee Stock Ownership Plan Succession Planning for Your Business Funding a Buy-Sell Agreement Q: What information is available under Resources for Your Business? A: The Resources for Your Business section contains information and materials that cover a wide range of topics to assist you. There are six areas to explore including: Articles Videos Worksheets & Sponsor Resources Glossary of Investment & Expense Terminology Glossary of Retirement Industry Terminology Abbreviations & Acronyms Q: What information is available under Articles? A: Under Articles you will find: What Employers Need to Attract Top Talent Developing an Education Program for Your Employees Advantages of an Employee Stock Ownership Plans Investment Policy Statement Best Practices A Win-Win Approach to Retaining Key People 7 Reasons to Use Life Insurance to Fund a Buy-Sell Agreements Helping Your Participants Catch Up Prepare to Transition to a New Retirement Plan Provider Qualified Default Investment Alternatives (QDIAs) Monitor Redemption Fees & Transfer Restrictions Understanding Retirement Plan Fee Disclosure Requirements Succession Planning for Your Business Timing of Retirement Plan Contributions 50-Year Relationship The Employee Benefits Story Q: What information is available under Videos? A: Under Videos you will find: 50-Year Relationship The Employee Benefits Story Q: What information is available under Worksheets & Sponsor Resources? A: Under Worksheets & Sponsor Resources you will find: Communication Goals Worksheet Communication Timeline Template Adjustments to Compensation & 414(s) Testing Administrative Guidelines for Plan Sponsors Distributing Materials Electronically Q&A Information Sharing Fact Sheet 58 P a g e

59 Required Minimum Distributions Roth In-Plan Conversion Q&A Understanding Participant Fee Disclosure Understanding The Plan Sponsor Statement Employee Education Policy Statement Guide Sample Employee Communication Timeline Sample Education Policy Statement Sample Investment Policy Statement Understanding Service Agreement Fee Disclosure Understanding Automatic Contribution Arrangements Products & Services The Products & Services pages of OneAmerica.com provide information for individuals and employers about the types of products and services we provide. The pages are split into products and services for Individuals and for Business & Employers. All of the products and services provided by the different divisions of OneAmerica are featured in this section, but we will focus Retirement Services. The Retirement Services section shows how we work with you and your financial professional and provide personalized service every step of the way. We can deliver a high quality retirement plan that appeals to employees and integrates seamlessly into your day-today operations. Tabs on the page include: Support Provides an overview of the areas in which we provide consistent and excellent service. Benefits Lists some of the services we offer. Industries Shows how we meet the needs of diverse organizations including, but not limited to, government, healthcare, non-profit, education, professional service firms, manufacturing and industrial. Careers The Careers page contains information about OneAmerica s culture, employment opportunities and employee benefits. OneAmerica values the contributions our employees make which is why we invest in them with well-rounded benefits, competitive compensation, development opportunities and more. About Us The About Us page includes links for: Vision & Values - Financial Strength & Ratings Companies of OneAmerica In the Community OneAmerica Resources Newsroom Other Information On the right side of each page you will find various links to additional resources such as our annual report, news releases, contact information and more. In addition, you will find a link to the One Day is Today online resource section of OneAmerica.com that provides interactive, on-demand educational resources to retirement plan participants. See One Day is Today for additional information. 59 P a g e

60 esponsor esponsor provides you with convenient, online plan management capabilities and provides real-time access to information necessary to administer your plan. Q: What information can be found on esponsor? A: You will have access to: Plan summary and specifications Administrative forms and educational content Plan and participant account activity Plan asset allocation summary Investment performance and unit values Plan and participant reports (including the participant summary report, plan entry report, participant electronic activity report) Loan center paperless loan environment (if applicable) Current and past issues of our Plan Sponsor Monthly newsletter Form 5500 series return filing, Compliance Testing Results and Top Heavy Results Q: How will I normally log in? A: After registering, to access esponsor: Go to Click on the icon Enter User ID and Password Click Sign in Select esponsor Q: What are the menu options? A: You will see the following options at the top of the screen: Administration Financial Details Investments Loan Center (if applicable) Participant Data Plan Reports Compliance Documents Administration The Administrations tab contains many features to help you administer your plan via the website. Included under this tab are the following options: Contribution and Census Management (CCM) -View information such as the CCM Funding Form, CCM Template Specifications and CCM User Guide. Plan Summary - View basics about your plan such as the plan name and plan number, important dates, authorized administrative services, plan specifications, plan features, retirement age, account information, contact information and plan source information. Service Roles - View a listing of contact individuals for questions about your plan such as your plan services consultant. My Plan Maintenance - Update the participant loan interest rate, maintain associate access (security), update express enroll default percent and update deferral and source display. Administrative Forms - View a listing of forms available for download in an Adobe Acrobat PDF format. Administration Manual - View our Plan Administration Manual that contains information and guidance on topics such as contributions, distributions, transfers, investment elections and more. View Division Detail (if applicable) - See Division designation, Division Name and Division Administrator. Legislative Update/Monthly Newsletter - View current and previous issues of the Plan Sponsor Monthly newsletter, our monthly publication that includes articles such as approaching deadline reminders, information regarding pension legislation and AUL news. In addition, you may view legislative update bulletins and articles and publications by 60 P a g e

61 category (e.g., contributions, distributions, compliance, etc.,) Account Services Information - View the features available to your plan participants through Account Services and links to the Online Account Management PDF. OneAmerica TeleServe - View the features available to your plan participants through OneAmerica TeleServe and links to the OneAmercia TeleServe Guide. Year End Services Center - Access links to information such as Creating Your Year End Census, Census Workshops, Census Completion Reference Materials, Compliance and Testing Reference Materials, Form 5500 series return and Summary Annual Report. Financial Details The Financial Details tab allows you to select a beginning and ending period of time to view activity. You may view activity by: Account Activity - View contributions, other additions, loan repayments, distributions/other deductions, investment gain and fees. Asset Allocation - View investment, sources (e.g., Deferrals), number of participants and dollar invested. Contribution Detail - View contribution type (e.g., normal contribution, loan repayment) and dollar amount during the selected time period. Contribution by Category - View contribution by investment option. Distribution Detail - View distributions including the check number, distribution type (e.g., rollover or cash), type of distribution (e.g., hardship, voluntary termination), reactivation date. All reports can be printed or downloaded. See Reports for additional information. Investments The Investments tab contains several ways to view the investment options of your plan. The investment options named under each tab also link to investment option summaries which are available as Adobe Acrobat PDFs or can be downloaded for use by employees. You may want to consider including investment option summaries in your new employee packet information. You can view: Performance - View the performance on the elected investments. If available, performance figures include year-to-date, one year, three year, five year, ten year and since inception at AUL. Please note that a check mark next to an investment option means that the investment has money in it. Unit Values - View investment option unit values. You may view a unit value for a specific date or you may select up to twelve investment options to view at one time by month. Investment Education - Obtain investment education information, including the basics of investing for retirement, building for your retirement and financial planning tools such as a loan calculator, paycheck calculator and college funding planner. Click on the Investment Education link that will take you to One Day is Today. Investment Advisor Service (if available) - Receive information on the benefits of advisor service, advisor contact information and investment model portfolio descriptions. 61 P a g e

62 Loan Center The Loan Center contains many features to help you administer plan loans (if allowed under your plan) via the website. Included under this tab are the following options: Loan Calculator - Calculate the amount of loan repayments by entering a loan amount, interest rate and duration of the loan. After selecting Calculate, you have the option of applying for the loan or recalculating with different variable data. Loan Summary - View details of all participants with loans, loan status, origination date, last payment date, payoff date, interest rate, original loan amount, outstanding balance and the payment amount. You may also click on a loan number to view loan repayment history for a particular loan. Loan Payoff Projection - View the estimated payoff amount up to 30 days in the future. Loan Specifications - View details some of the loan provisions of your plan including whether or not loans are allowed, the loan interest rate, loan processing fee, minimum and maximum loan amount allowed and the maximum number of loans allowed. Loan FAQs - View loan information in a question and answer format. Delinquent Loans - View the Loan Delinquency Report which you may use to automatically notify us of defaulted loans. Participant Data The Participant Data tab helps you manage your participant information by giving you several ways to view and update participant data and report new employees. You may select: Participant Account Activity - View a participant s activity for a selected period of time. You will see a list that reflects all participants. Click on the participant to view the participant s activity and enter a range of dates. You will then see two summaries of activity in two formats: By Contribution Source and By Investment Option. Participant Statements: Click on the participant name and you will see statements that are available to view or print. View Participant Data - View personal data such as name, status, employment date, date of birth, address and vesting information by source. You will see a list that reflects all participants. Click on the participant to view Personal Data, Source Information and Account Balance information. Update Participant Personal Data - Update address information. You will see a list that reflects all participants. Click on the participant to bring up personal data screen where you may make changes. Add New Hire - Add a new employee to the recordkeeping system by providing information such as Social Security number, name, date of birth, date of hire, division (if applicable) and address. New employees may also be added to the recordkeeping system through CCM. Adding a new employee does not enroll the employee in the plan. The employee must enroll through Account Services or OneAmerica TeleServe and select investments, deferral percentages, etc. If you have investment and deferral percentage information you may enroll the new hire through eenroll Employee the day after they are added to the recordkeeping system through Add New Hire or CCM. eenroll Employee - Enroll a new hire and select investments, deferral percentages, etc., as authorized by the new hire. Employees listed on the Plan Entry Report will be displayed or you may search for the employee by name or Social Security number if the employee has been added to the recordkeeping system. You may add the new employee to the recordkeeping system through Add New Hire 62 P a g e

63 or CCM. You must wait until the day after the employee has been added to the recordkeeping system before you eenroll the employee. Note: you do not need to forward enrollment paperwork to AUL but should save for your records. Change Participant Employment Status - Change an employment status of an employee (e.g., deceased, disabled, retired, terminated). You will see a list that reflects all participants. Click on the participant to bring up and change and select the new status and the date of the event. Change Participant Advisor Status - Sign up or terminate advisor service for participants. Beneficiary Information - Add, change and view beneficiary designations by participant. Pending Transactions - See a report of participant beneficiary designations that are pending for processing or awaiting spousal consent and release. Mandatory Cashout Center includes: o o o o MCO Ineligible Participants - Review participants who are eligible for MCO but who we do not have a complete address on file. MCO Status Overview Report - View the status of each MCO by participant and the projected date of payout. MCO Notification - Update automatic notification frequency. Choices include biweekly, monthly and quarterly MCO Information Guide - View the Mandatory Cashout (MCO) Questions and Answers document. Plan Reports There are many reports available to assist you with the administration of your plan. The Plan Reports tab contains: Payroll Feedback File - View a comprehensive report that can be downloaded for your use for both Contributions and Loans. Reports are available on demand using the date range you select or you may also schedule your reporting with a selected date range and frequency you choose (e.g., weekly, monthly, quarterly). The scheduled request allows you to include additional people to be notified when the report is produced. Plan Entry - View employees who have met the eligibility requirements to participate in the plan within 65 days. Participant Reports o o o o Beneficiary Designation Report of the primary beneficiary or if no beneficiary designated. Address Changes/eActivity (formerly the Participant Electronic Activity Report PEAR) May be requested on demand for any time period you choose. The report provides information such as the date the participant enrolled using Account Services or OneAmerica TeleServe, current deferral election (by percentage or dollar), whether the initial request or change request was through Account Services, OneAmerica TeleServe or esponsor, the action requested [e.g., enrollment (new), update information (change), etc.,], what information was updated if applicable (e.g., address). Historical Feedback File Select activity (i.e., all loans and deferrals, loans, deferrals), date range and participant search criteria (i.e., all participants, by participant last name or participant number) to request a report. Missing Address - Displays all participants with an account balance who do not have a current address on file. Remember, address information is needed to send participant quarterly statements. 63 P a g e

64 o Participant Summary Report - Published quarterly and reflects activity by participant in the following categories: beginning balance, contributions, other additions, transfers in and out, loan repayments, distributions/other deductions, investment gain/loss, ending balance. o Transaction Summary - Summary quarterly reports and annual overview which is by per participant and lists contributions (by source) that a participant has made for the year. Shows contribution amounts, loan payment totals, earnings, etc. Participant Election Default Reports o Current Defaulted Participants - May select by participant name or number. o Defaults by Payroll Date - Provides links for detail by payroll that displays all participants without investment elections. If your plan has a qualified default investment alternative (QDIA), participants without investment elections will be invested in the fund selected as part of the QDIA arrangement. A default report will not be produced for these individuals. Annual Reports - Includes the cover letter, certification letter and a copy of the annual report. You can view, print, search and download the report. Periodic Plan Review (if applicable) - Includes a plan review, investment review, fee disclosures, plan overview, compliance update and action plan. Advisor Fee Report (if applicable) - Report of advisor fees by time period. Advisor Statistics (if applicable) - Plan summary of number of participants using the advisor service and a breakdown of participants using each investment model and total asset value in each investment model. See Reports for additional information. Compliance Keeping your plan in compliance is critical to maintaining its qualified status. The Compliance tab contains: Compliance Testing - View your ADP and/or ACP nondiscrimination test results and compliance summary. Form Connect to your Form 5500 series return filing which will allow you to complete missing information and print attachments and supporting documentation. Top Heavy - View the results of your most recent top heavy determination. Census Reporting - View a copy of the annual questionnaire and census that you submitted for your plan. Documents There are many documents related to your plan and these provide the framework for the administration of your plan. The Documents contains: Plan Documents (including Amendments and Notices) o Administrative Procedures o Main Plan Documents o Plan Amendments o Plan Correspondence and Notices Summary Plan Descriptions, Summary of Material Modifications Contract, Amendments and Agreements o Contract and Contract Amendments o Service Agreements and Fee Disclosures 64 P a g e

65 Participant Support OneAmerica.com The OneAmerica.com website is designed to support you and your employees every step of the way. The site provides: Easy access to accounts Concise and clear information about who we are and the products and services we offer Transparent paths to contact us Education resources Content is updated frequently; therefore, we encourage you to visit the website often. Q: How do participants navigate within the website? A: When you visit you will see the following links: Financial Education Products & Services Careers About Us Search icon Login In addition, there are the following links: Contact Us Find a Financial Professional Newsroom Financial Professionals Financial Education Individuals The Financial Education section of OneAmerica.com provides helpful educational information and tools for businesses/employers and individuals. The content is provided by all divisions of OneAmerica and spans the life stages a reader may encounter. Q: What information is available under Develop a Strategy? A: The Develop a Strategy section contains information to help participants take their first step toward a financial strategy. Participants can scroll through a carousel of articles and videos that include: 10 Things You Should Know About Life Insurance 3 Things to Understand When Choosing Investment Options Reasons to Enroll in Your Plan Term vs. Perm Q: What information is available under Manage Your Strategy? A: The Manage Your Strategy section contains information to help participants ensure that their money is working hard for them and that they are pursuing the goals that make sense to them. Participants can scroll through a carousel of articles and videos that include: Facts on Diversification Facts on Contributions Retaining & Storing Important Financial Documents Who Are the Beneficiaries for Your Financial Accounts? Term to Permanent Life Insurance with OneAmerica Q: What information is available under Enjoy Retirement? A: The Enjoy Retirement section contains information to help participants maintain their retirement lifestyle for the long term. Participants can scroll through a carousel of articles and videos that include: What is Long-Term Care? 65 P a g e

66 Planning for Long Term 5 Ways to Prepare for Retirement Q: What information is available under Leave a Legacy? A: The Leave a Legacy section contains information to help participants learn about estate planning and long-term care coordination. Participants can scroll through a carousel of articles that include: Calculating Estate Tax Estate Gifting Strategies Preserving Your Estate: Marital Deduction & Unified Credit Strategies Q: What information is available under Resources for You? A: The Resources for You section contains information and materials that cover a wide range of topics to assist participants. There are five areas to explore including: Articles Videos Calculators Rollovers & Distributions Glossary of Investment & Expense Terminology Q: What information is available under Articles? A: Under Articles participants will find: 3 Things to Understand When Choosing Investment Options 5 Ways to Prepare for Retirement Calculating Estate Tax Disability Awareness Month Estate Gifting Strategies Preserving Your Estate: Marital Deduction & Unified Credit Strategies Saving for College Retaining & Storing Important Financial Documents Term to Permanent Life Insurance with OneAmerica 10 Things You Should Know About Life Insurance Who Are the Beneficiaries for Your Financial Accounts What is Long-Term Care? Q: What information is available under Videos? A: Under Videos participants will find: Facts on Contributions Facts on Diversification Life Insurance Term Vs. Perm Planning for Long Term Reasons to Enroll in Your Plan Q: What information is available under Calculators? A: Under Calculators participants will find: Asset Allocation Calculator 403(b) Catch-up Calculator College Cost Calculator Economic Life Calculator Q: What information is available under Rollovers & Distributions? A: Under Rollovers & Distributions participants will find contact information for the Participant Service Center. The Participant Service Center is available to provide information and assistance with any of the following: Distribution options Taxes and penalties Rollover decisions Account consolidations Retirement asset reporting Loan requests Accessing and submitting forms 66 P a g e

67 Products & Services The Products & Services pages of OneAmerica.com provide information for individuals and employers about the types of products and services we provide. The pages are split into products and services for Individuals and for Business & Employers. All of the products and services provided by the different divisions of OneAmerica are featured in this section, but we will focus Retirement Services. The Retirement Services section shows how we work with you and your financial professional and provide personalized service every step of the way. We can deliver a high quality retirement plan that appeals to employees and integrates seamlessly into your day-today operations. Tabs on the page include: Support Provides an overview of the areas in which we provide consistent and excellent service. Benefits Lists some of the services we offer. Industries Shows how we meet the needs of diverse organizations including, but not limited to: o Government and healthcare o Non-profit and education o Professional service forms o Manufacturing and industrial Careers The Careers page contains information about OneAmerica s culture, employment opportunities and employee benefits. OneAmerica values the contributions our employees make which is why we invest in them with well-rounded benefits, competitive compensation, development opportunities and more. About Us The About Us page includes links for: Vision & Values - Financial Strength & Ratings Companies of OneAmerica In the Community OneAmerica Resources Newsroom Other Information On the right side of each page participants will find various links to additional resources such as our annual report, news releases, contact information and more. In addition, participants will find a link to the One Day is Today. One Day is Today One Day is Today is the online resource section of OneAmerica.com that provides interactive, on-demand educational resources. One Day is Today contains: Getting Started Retirement 101 Investing Personal Finance Nearing Retirement Q: What will participants find under Getting Started? A: Getting Started contains resources to help participants start working toward their goals. Articles include: Guide to Setting Financial Goals Take Advantage of Matching Contributions to Your Retirement Account Setting Your Retirement Income Goals What to Expect When Your Retirement Plan is Transitioning to a New Provider 4 Things You Should Know About Designating Your Beneficiary Begin Working Toward Your Retirement Goals Today Calculators include: Asset Allocation Calculator Small Changes, Big Savings Cost of Waiting Multimedia available: Avoid Retirement Mistakes (audio) Pete the Planner discusses the mistakes to avoid while preparing for retirement. 67 P a g e

68 Understanding 529 College Saving Plans (tutorial) Discusses what 529 plans are, how they work and how they may differ from plan to plan. Facts on Contributions (video) Discusses how starting early gives investments more time to grow. Facts on Diversification (video) Helps participants learn the basics elements of investing and how to develop an asset allocation that fits their needs. Retirement Expectations vs. Reality (ichart) Explores recent research showing how participants may be overly optimistic when it comes to their retirement savings expectations. Q: What will participants find under Retirement 101? A: Retirement 101 provides basic information of solid retirement preparation. Articles include: Guide for Starting Late With Retirement Preparation The Benefits of Tax Deferral 4 Things to Consider Before Taking a Loan from Your Retirement Account Contribute More to Your Retirement Account Checking in on Your Retirement Preparation Progress Simplify Your Retirement Accounts Calculators include: Asset Allocation Calculator 403(b) Catch-Up Calculator Small Changes, Big Savings Cost of Waiting Multimedia available: From Today to Retirement (audio) Pete the Planner discusses preparing for retirement no matter what stage of life. Investing in Retirement (tutorial) Examines the risks, strategies and other unique considerations of investors who are in or nearing retirement. Facts on Contributions (video) Discusses how starting early gives investments more time to grow. Facts on Diversification (video) Helps participants learn the basic elements of investing and how to develop an asset allocation that fits their needs. Tax-Efficient Withdrawal Strategies (ichart) Demonstrates the potential impact of choosing to take withdrawals from tax-deferred versus taxable accounts. Q: What will participants find under Investments? A: Investments resources can help participants achieve greater understanding of investment concepts. Articles include: Guide to Choosing a Financial Advisor 5 Tips for Coping with Market Volatility 3 Things You Should Know About Diversification Evaluate Investment Options Using These 8 Pieces of Information Types of Investments 3 Things You Should Know About Risk & Return in Investing Calculators include: Asset Allocation Calculator Multimedia available: Retirement Income Planning (tutorial) Offers guidance on the steps involved with retirement income planning. Facts on Diversification (video) Helps participants learn the basics elements of investing and how to develop an asset allocation that fits their needs. Putting Time on Your Side (video) Demonstrates how the power of compounding is critical to pursuing retirement savings goals. 68 P a g e

69 Q: What will participants find under Personal Finance? A: Personal finance resources can help participants get their financial life in order and become more financially savvy. Articles include: Guide to the Four Stages of Your Financial Life Guide to Net Worth The Ultimate Financial Metric Guide to Teaching Your Kids About Money Guide to Marriage and Money Guide for New Homebuyers Guide for Single Parents 4 Steps to Create Your Household Budget The Financial Differences Between Men & Women Set Financial Goals in 5 Steps 5 Steps to Take Control of Your Debt 4 Tips for Teaching Your Kids About Finances Calculators include: College Cost Calculator Economic Life Value Calculator Small Changes, Big Savings Multimedia available: Balance Spending (audio) Pete the Planner discusses balanced spending. Credit Scores (audio) Pete the Planner explains credit scores. Estate Planning (audio) Pete the Planner discusses the importance of estate planning. Financial Behavior (audio) Pete the Planner asks, Why don t we do what we know we should do with our money? Asset Allocation: A Strategy for Life (tutorial) Explains the concept of asset allocation, how it works and how to manage asset allocation over time. The Impact of Fees on Investment Returns (video) Details how fees charged by a fund might affect potential returns. Q: What will participants find under Nearing Retirement? A: Nearing Retirement helps participants get a clearer picture of what their living expenses may be in retirement. Articles include: Guide to Dealing With Debt in Pre-Retirement 5 Options for Your Account When You Retire 5 Things to Do When You Are Getting Close to Retirement What Are Catch-Up Contributions? 4 Things You Should Know About Required Minimum Distributions (RMDs) Understanding Social Security Calculators include: Asset Allocation Calculator 403(b) Catch-Up Calculator Multimedia available: Social Security/Medicare (audio) Pete the Planner discusses Social Security and Medicare. Retirement Plan Rollover Options (tutorial) Explains the different options available when a participant changes jobs and how each might affect their tax bill and available funds. Inflation s Impact on Your Retirement Income Needs (video) Discusses the effect price increases have on an individual s retirement income. 69 P a g e

70 Account Services Account Services gives participants the ability to manage their retirement account 24 hours a day, seven days a week. Account Services lets participants: Register and enroll online Transfer balances between investment options View and change investment option elections for future contributions Check account balances by investment option or contribution type View daily and monthly unit values View and/or cancel pending transactions Update personal profile Model and initiate plan loans (if applicable) Manage beneficiary designations To access Account Services participants should: Go to Enter their User ID and Password Click At the top of the screen in Account Services participants will see: Messages (if any) Participant name If the participant clicks on the icon next to their name, they will see the following: 70 P a g e

71 On the left side of the screen, the participant will see the following options: If available If available On the right side of the page the participant may select one of the following touts: It really adds up Link to One Day is Today Based on plan provisions, participants will see one of the following options: Manage your investments. What type of investor are you? Need investing help? Who is your beneficiary? Link to view or edit personal information including beneficiaries. 71 P a g e