Chapter 6 Contribution Remittance Overview

Transcription

1 Chapter 6 Contribution Remittance Overview Once deductions have been established on your payroll system, contributions and participant contribution data should be submitted to Transamerica. Employee deferrals must be deposited in the plan s trust as soon as administratively feasible, but in no event later than the 15th business day of the month following the month in which they have been withheld from the participants paychecks. There are two important elements used in submitting your contributions: 1: Contribution Data Submission (Two methods) Web access ( 3½ diskette 2: Contribution Remittance (Three methods) ACH (Automatic Clearing House) collection ACH payment/wire transfer Check Data in Good Order A remittance that is incomplete will be deemed effective as of the date it is considered to be in good order. Good order means: Contribution data is received prior to or with your deposit Contribution data is equal to the deposit amount remitted The remittance via check, wire or ACH is properly identified by its contract number or Plan I.D. number All contributing participants are identified by name and Social Security number Remittances in good order will be processed in accordance with the timing standards stated in your service agreement. A remittance is not in good order when: Remittance details are missing Details and deposit amounts do not balance Participant information is missing, such as names or Social Security numbers The remittance requires data manipulation prior to processing of the diskette or Internet file The remittance includes contributions for participants who are not enrolled Negative contributions are received that cannot be supported Incomplete remittances will be deemed effective as of the date the remittance is considered in good order, which means, all necessary corrections have been made and/or information has been provided, so that the remittance can be processed accurately. If TRS receives a remittance that is not in good order, we will contact you to review remedial steps.

2 6.1 Contribution Data Remittance Web Access Transamerica allows plan sponsors to easily submit participant allocation reports electronically, which is an important component of managing their retirement plan. TRS relies on the timely, accurate submission and reporting of Participant contributions to efficiently allocate participant funds. Why Use TransAccess SM? The Payroll Validator feature allows you to immediately determine whether your payroll submission has any errors via the Internet. If no errors are indicated, you can instruct the validator to process your payroll file. If errors are indicated, you must correct your payroll file and resubmit it to the validator before it can be processed. How Does It Work? With a personal computer and access to the Internet, TransAccess SM allows the plan sponsor to send their contribution data electronically to our recordkeeping system and automatically transfer the funds via ACH. When the submission is received, an electronic confirmation will appear on the plan sponsor s monitor, preventing any mail delays or overnight charges. The process also expedites the allocation of the payroll contributions into the retirement plan. It's that easy. The Payroll Validator offers validation of your file against the recordkeeping system and immediate notification of errors, including: Participants missing investment elections Invalid Social Security numbers Loan repayments submitted for a participant without an outstanding loan Loan repayments exceeding outstanding loan balances The ability for you to use the plan s forfeiture account balance to offset the contribution total you remitted On-screen verifications including: Confirmation number verifying the upload of your payroll file When ACH is your selected funding method; you will be notified of the day in which your account will be debited for the contribution amount submitted When a check or wire is your selected funding method, your payroll file will be processed once the funding is received confirmation that your file has been received will include: Receipt date Confirmation number verifying the upload of your payroll file Current pay period contribution totals by money source Current pay period contribution grand total

3 6.1 Contribution Data Remittance Web Access (Cont.) Catch-Up Contributions Employers can allow plan participants aged 50 and older to contribute an additional $1,000 per year on a pretax basis. Please refer to your plan document to verify that this provision has been updated. The amount will increase annually, reaching $5,000 in After 2006, the $5,000 limit is subject to cost of living increases. Catch-up contributions will not be subject to discrimination testing or other contribution limits. Employee maximum deferrals allowed under the plan or by law must be reached before any deferrals can be considered as catch-up contributions. Contributions will be recharacterized as catch-up upon reaching that limit. Submission of Catch-Up Contributions If any of your participants elect to take advantage of this provision, you may provide a separate column on your contribution report to show projected catchup contributions. This method is being provided to help you track catch-up contributions throughout the year, as these contributions are considered participant deferrals. At the end of the plan year, total participant deferral amounts will be compared to the maximum limits allowed under the plan or by law. If the combined amount does not exceed either of these limits, the total deferrals will be treated as regular deferrals for the year. If, however, there is an excess amount, that excess will be recharacterized as a catch-up contribution. Roth 401(k) Contributions If your have elected to allow your participants to contribute Roth 401(k) contributions to the plan, please note that the Roth contributions must be separately reported on the payroll file layout as indicated on the next page. If your plan currently does not allow for Roth 401(k) contributions and you would like to amend your plan to add this provision, please contact your Account Executive or TRSConnect SM.

4 6.1 Contribution Data Remittance Web Access (Cont.) Web Access File Upload To submit payroll information via the Web: 1) Using your browser, go to 2) Enter your username and password. If you do not know your username and password, please contact TRSConnect SM for assistance. Click on the right arrow button 3) Select Plan Administration 4) Select Payroll Contributions 5) From the Payroll Contributions page, click the Approved Excel Template link 6) Click Open, and then save the Excel spreadsheet in a location you can retrieve later 7) On the Excel spreadsheet that you just saved, type in the plan contribution amounts. See below for column heading codes: Column Heading Description Plan Number Sub Company Number SSN Social Security Number Title Mr., Ms. etc. First Name Last Name Suffix Jr., Sr. etc. P. E. Date Pay Period End Date MBK CONT Pretax Employee Contribution MKE CONT Employee Catch-up Contributions EBK CONT Employer Matching EBA CONT Employer Nonmatching ESK CONT Employer Safe Harbor Matching or Nonmatching ESA CONT QNEC (Qualified Non-Elective Contribution) RTH CONT Roth Contributions RTC CONT Roth Catch-up Contributions MBA CONT After-Tax Employee Contributions Loan Repayments Loan Repayment Amount combine all loans Loan Payoff Amount Lump-Sum Loan Payoff Amount Plan Compensation YTD Excluded Compensation YTD Hours worked YTD Address 1 Address 2 City State Zip Code Date of Birth Date of Hire Date of Term Rehire Date Do not change the Column Heading or format of the spreadsheet (for example, do not enter dollar signs or totals) Note the total amount Save the file

5 6.1 Contribution Data Remittance Web Access (Cont.) 8) Return to the Web site and repeat steps 1 through 4 9) On the Payroll Contributions page, enter the required information on the form Total Dollar Amount should equal Deposit Amount unless forfeitures are being used to fund all or a portion of the contribution 10) In the File to Upload entry field, click the Browse button, select the Excel file saved earlier, and click Open the sheet name should be left blank 11) After verifying the information entered, click the Upload button 12) From the Upload Payroll Contributions page, click the Confirm button 13) The next page will provide you with the confirmation number. Either print the page or note the confirmation number for your records 14) An will be sent to you confirming that your file has been received. It will also include the receipt date, contribution totals by money source, contribution grand total, and the confirmation number verifying your upload If an error message appears during the above process, please contact a TRSConnect SM plan specialist to assist you.

6 6.2 Contribution Remittance ACH, Wire or Check There are three methods available to remit your plan s contributions: ACH (Automated Clearing House) Collection ACH Payment/Wire Transfer Check Remitting Via ACH Collection This is the optimal method of remitting contributions to your retirement plan. After Transamerica reconciles your contribution data, they will send a request for funds, via ACH, to your bank. The funds will be withdrawn from your account within 48 hours after the reconciliation of data is received in good order. Note that if a weekend or holiday falls within this time frame, the funds will be processed on the next business day. Signing Up to Use ACH Collection A request form for ACH must be completed by your organization to begin implementation of the convenient service. A sample ACH Authorization Form can be found at the end of this section. Remitting via ACH Payment/Wire Transfer This option is available if you prefer to initiate the ACH payment as opposed to Transamerica Retirement Solutions debiting your account. However, in order to use this feature, you must contact your bank to set up a pre-note. You must give the bank the following information to ensure the ACH transaction is properly identified. Contract Number Plan ID ABA Number: Account Number: A sample wire instruction is at the end of this section.

7 6.2 Contribution Remittance ACH, Wire or Check (Cont.) Remitting Via Check When remitting by check follow these instructions: 1. Make the check payable to Transamerica. Only one check is required per remittance. 2. Write your company s plan name and contract number on the stub portion of the check. 3. In the case of upload via the Web site, remit your labeled check. 4. In the case of a diskette, include hard copies of each of these with a labeled check. 5. Mail the check to: Transamerica East 100 G Executive Drive Edgewood, NY Important Notes: Reconciling Submissions and Remittances Incomplete Remittances: If we receive a check without allocation data, we will call your office to follow up on the instructions. If you submit contribution data without payment, it is your responsibility to follow up on the processing of that contribution. Correct Payment: If the total of the data equals the check submitted and we have investment elections on file for each participant, we will credit the contributions to your plan s trust within the timing standard stated in your service agreement. Overpayment: If the total contributions due in accordance with the data are less than the amount of the check submitted, we will call your office to determine the reason for overpayment. If the overpayment is determined to be legitimate and we are able to allocate the total amount of the deposit, we will credit the check to your plan s trust and process the investments as indicated above. The amount in excess of the contribution data will be refunded to the plan sponsor via check. Underpayment: If the amount of the check is less than the amount of the contributions due and you do not indicate that forfeitures are to be used, we will call you to ascertain the reason for the difference. The funds will not be allocated until the issue is resolved.

8 Automated Clearing House (ACH) Authorization Form Use this form to establish automatic withdrawals from your banking account for your retirement plan contributions, as indicated below. CLIENT DATA Name of Plan Name of Plan Sponsor Name of Technical Contact Address Plan Number Phone Number Phone Number AUTHORIZATION TO BANK: Please accept this as formal notification that effective, Transamerica will be responsible for the recordkeeping of the retirement plan mentioned above. Transamerica is hereby authorized to access the account listed below on behalf of the plan and to withdraw monies in respect to contributions via the Automated Clearing House (ACH). Transamerica is authorized to withdraw the exact contribution amount remitted to Transamerica by the Plan Sponsor. The Plan Sponsor has full responsibility for this retirement plan. The undersigned, as an authorized signor on behalf of the Plan, hereby grants Transamerica authority to make withdrawals from the account noted below: Bank Street Address Bank Account Name Bank Account Type Checking Bank Account Number Routing Number Bank Representative Phone Number The Plan Sponsor agrees to provide Transamerica with 30 days notice prior to closing or changing this account. Signed: Date Title IMPORTANT: Please complete and send this document to your bank. NOTE: Please send the ACH Authorization, and a blank voided check to Transamerica. Fax to:

9 Wiring Instructions: Remittances to Transamerica Bank Name: Account Name: JP Morgan Chase Bank 4 Chase Metro Tech Center Brooklyn, NY Transamerica Financial Insurance Company Account Number: ABA Number: For the Account of: [Your company name and plan s contract number]

10 6.3 Contribution Remittance Forfeitures A forfeiture is the nonvested portion of a participant s account that is given up, or forfeited, when he or she terminates service and requests a distribution of his or her vested plan benefit. Refer to your plan document to identify how forfeitures are to be handled. After the close of the plan year, your plan document will dictate whether these forfeiture funds can be used to: Pay plan expenses Reduce employer contributions Give participants an additional contribution (are reallocatied) How Do Forfeitures Reduce Employer Contributions? If your plan is set up to have forfeitures used to reduce employer contributions, you should contact TRSConnect SM to find out how much the forfeiture account contains at the time you are ready to make your employer contribution. You can then reduce the anticipated contribution amount by the forfeitures. Example: The 2007 employer contribution is calculated to be $50,000. You call TRSConnect and find out that the Plan currently has $2,000 in forfeitures in suspense from 2006 plan year. Instead of sending in a check for $50,000, you would only need to send in $48,000 with a directive to use the $2,000 in forfeitures. At the time of funding, you would need to inform Transamerica in writing of your intent to use the forfeitures to offset the contribution.

11 6.3 Contribution Remittance Forfeitures (Cont.) What if You Don t Intend to Make a Contribution? If your company does not intend to make a contribution but there are forfeitures available at year end, you should direct Transamerica to allocate these funds according to the stated employer contribution formula. Example: For the 2007 plan year, the company is unable to make an employer contribution. The company contacts TRSConnect SM to find out what the plan currently has in forfeitures available to them. The company can then instruct Transamerica of their intent to make a contribution in the amount of the forfeitures and request that Transamerica reduce their contribution by the forfeiture. This will bring the required company contribution to zero. You must use your forfeitures on an annual basis regardless of whether you intend to make an employer contribution. What if the Plan Reallocates Forfeitures? If your document provides for the reallocation of forfeitures, you should direct Transamerica to reallocate those amounts when you send in your employer contribution amount. March 2007 TAE-MEP PSG