Plan Sponsor Administrative Manual

Transcription

1 Plan Sponsor Administrative Manual V 3.1 Sponsor Access Website January 2017

2 Table of Contents Welcome Overview... p 5 How to Use this Manual... p 5 Enrollment Overview... p 7 Online Enrollment Description... p 7 Online Enrollment Instructions... p 7 Providing Website Access for New Enrollees... p 8 Frequently Asked Questions... p 9 Contribution Submissions Overview... p 12 Contribution Submission Description for Ongoing Payrolls... p 12 Contribution Submission Instructions for Ongoing Payrolls... p 12 Rollover Contribution Submission Description... p 13 Rollover Contribution Submission Instructions... p 13 End of Year Employer Contribution Submission Description... p 14 End of Year Employer Contribution Submission Instructions... p 14 Loan Payoff Description... p 14 Loan Payoff Instructions... p 15 Frequently Asked Questions... p 16 Distribution Upon Separation from Service Overview... p 20 Separation from Service Distribution Description... p 20 Online Distribution Description... p 21 Online Distribution Instructions... p 21 Distribution Due to Termination, Retirement or Disability Submitted Via Form... p 21 Death Distribution Description... p 22 Death Distribution Instructions... p 22 Outstanding Loan Issues Upon Separation from Service... p 23 Reporting Distributions on Form 1099-R... p 23 Frequently Asked Questions... p 24 In-Service Distributions and Loans Overview... p 28 Participant Loan Description... p 29 Online Loan Description... p 29 Online Loan Instructions... p 29

3 Table of Contents Hardship Distribution Description... p 30 Hardship Distribution Instructions... p 30 Pre-Retirement Distribution Description... p 32 Pre-Retirement Distribution Instructions... p 32 Minimum Distribution at Age 70½ Description... p 33 Minimum Distribution at Age 70½ Instructions... p 33 Qualified Domestic Relations Order & Joinder Description... p 34 Qualified Domestic Relations Order & Joinder Instructions... p 34 Reporting In-Service Distributions on Form 1099-R... p 35 Frequently Asked Questions... p 35 Reports Available Via Web Overview... p 39 Participant Statement Description... p 40 Frequently Asked Questions... p 40 Participant Account Access Overview... p 43 Website Description... p 44 Access Instructions First Time Users... p 44 Access Instructions Subsequent Users... p 44 Interactive Voice Response System Description... p 45 Interactive Voice Response System Instructions... p 45 Frequently Asked Questions... p 46 Plan Sponsor Web Tools Overview... p 49 Accessing Plan Sponsor Web Tools... p 50 Frequently Asked Questions... p 51

4 Welcome Overview... p 5 How to Use this Manual... p 5 4

5 Welcome Overview Newport Group is an independent national service provider of bundled retirement plan services. With over 30 years of experience providing comprehensive retirement plan services, we work exclusively for our clients rather than sell investments. Our bundled product provides clients with a truly open-architecture investment solution for their plans. Our core values are based upon investment independence, expertise and outstanding service. It is our pleasure to welcome you as a client and we look forward to a long lasting working relationship. This manual is intended to help our clients understand various operational components of plan administration using the Newport Group recordkeeping system. This manual is not intended, however, to replace your personal contact with your designated Relationship Manager. Please feel free to or call your relationship manager if you have questions or need assistance. Please take a few moments to review the sections included in this manual. We believe that you will find that the manual is an excellent reference tool for obtaining important information about your retirement plan operations. How to Use this Manual We have organized this manual into several sections that relate to a variety of distinct operational functions. Each section is then broken down into several subsections. The subsections include some or all of the following: Overview Description Step-by-Step Instructions Frequently Asked Questions When you have a question about a specific topic, refer to the Table of Contents to find the general subject matter in question. More specific information about the subject matter will be found in the subsections. 5

6 Enrollment Overview... p 7 Online Enrollment Description... p 7 Online Enrollment Instructions... p 7 Providing Website Access for New Enrollees... p 8 Frequently Asked Questions... p 9 6

7 Enrollment Overview After an employee has met the eligibility and entry date requirements as provided in your plan document, the employee may enroll in the plan. Employees can enroll in the plan through the Online (paperless) Enrollment process. Online Enrollment is a quick and easy way for employees in your company to enroll in your plan. Reports are made available on our website for you to retrieve deferral election changes that were made online. Online Enrollment Description During the Online Enrollment process, the employee will be asked to verify personal information and fill in specific elections pertaining to the amount of his or her deferral, the investment elections for the investment of these contributions into the funds offered in your plan and the designation of his or her beneficiary. This enrollment process takes about 10 minutes. The designated Plan Administrator on your staff will be able to access this information using the Plan Sponsor Web functionality (please see section entitled Plan Sponsor Web Tools). Please feel free to call your Relationship Manager if you have any questions about Online Enrollment or if you need any help with these procedures. It is important to remember that an employee can complete the enrollment steps outlined prior to reaching their eligibility/plan entry date. Until the employee is eligible to participate and has reached the plan entry date, he or she will not have access to the full website. Online Enrollment Instructions STEP 1: Include all new employees census data on your contribution file submission to Newport Group. STEP 2: You may copy and paste this How to Enroll link to the educational video tutorial and send to your employee, or have them follow the steps below. STEP 3: New enrollee logs into using his or her social security number as the User Name and his or her date of birth (MMDDYYYY) as the default Password. STEP 4: Employee will be guided through the enrollment steps which include completing and verifying personal information, assigning primary and contingent beneficiaries, taking a Risk Questionnaire, selecting their deferral, making initial investment elections offered in the plan, and utilizing the My Forecast online gap analysis tool. STEP 5: Once the employee fulfills the eligibility requirements and has completed the online enrollment, Newport updates the HRIS file with the participant elections. STEP 6: The designated Plan Administrator on your staff logs into and downloads the HRIS file for the current payroll period prior to running the payroll. This information should be used to update your payroll system. 7

8 Enrollment Providing Website Access for New Enrollees Certain personal information must be submitted to Newport Group before a participant can have access to the website. You may need to add an employee to before they are included on a contribution submission if your plan allows for immediate eligibility. See the steps below on how to establish the employee outside of the normal payroll process. Click here to launch the educational video tutorial on How to Upload a Payroll File, or follow the steps below: STEP 1: Create a.csv, Excel, or text file that contains the following data for the new employee: Required Column Description Minimum Maximum Character Length Character Length Payroll Date Payroll Date 6 8 EE Status EE Status 1 15 Plan ID Plan Identification Number 7 7 SS Number Social Security Number 9 9 Last Name Surname 1 25 First Name First Name 1 15 Address 1 Address 1 35 City City 1 35 State State 1 35 Zip Zip 5 9 EE Location EE Office Location 1 20 Employment End Date Last Date of Employment 6 8 Birthdate EE Birthdate 6 8 Hire Date EE Most Recent Date of Hire 6 8 EE Hours EE Hours for Pay Period 1 6 The file should not contain formulas, addresses or special formatting. The columns in this example are required when adding new participants to the plan. However, please note that Plan ID s are only required if more than one plan s data is included on the file. These same file guidelines also apply to your ongoing contribution payroll submissions, as explained later in this Administrative Guide. STEP 2: Go to and login as Sponsor Access by selecting the role of Sponsor Access. If you do not know whether you are set up with Plan Sponsor access through please contact your Relationship Manager. STEP 3: Click the Shortcuts menu, then select Upload Payroll File from the dropdown menu under My Plans. STEP 4: On the payroll screen, select Import Payroll. STEP 5: On the Import Payroll window, select Browse to find and select the payroll file you created for upload. Select the appropriate file format from the Existing Formats dropdown menu. Click Upload and Review. STEP 6: Upon file upload completion, you can then begin to edit the payroll file. If the information entered does not match plan attributes, you will be presented with an Error message alerting you that a correction on the participant data is needed before you can proceed. STEP 7: Once you have corrected any errors, you will have the opportunity to review the Payroll Details and then click Submit. You will then be redirected back to the payroll home page. STEP 8: On this page you will Fund Your Payroll. From the Actions drop down menu, click on Fund. If the payroll has ACH as the funding method chosen, you will simply enter the amounts that come from each bank account for all locations. If the plan has forfeiture dollars available for use, you may use them to offset the payroll contribution by entering the amounts in the forfeiture section. Any entry here will offset the amount you have funded. Select Continue. STEP 9: The final step is to verify your data, and then enter a valid address to receive your process confirmation . If this is your first time uploading a payroll file, verifying the money type and source will be particularly important. Click Submit. Your payroll will now be processed. Any payroll files submitted after 3:00 pm Central Standard time will be processed on the following business day. STEP 10: The next business day, the employee can log into using his or her social security number as the initial User Name and his or her date of birth (MMDDYYYY) as the default Password. 8

9 Enrollment Frequently Asked Questions Question 1: What if a participant fails to make investment elections online or by phone? How will contributions be allocated? If a participant fails to make investment elections online or by phone, contributions allocated to his or her account will be deposited into the plan s default investment fund. Your plan s default investment fund may be found on the Plan Information Section. Question 2: How does a participant change the amount they defer into the 401(k)/403(b) plan? A participant changes the amount that he or she contributes into the plan using the internal procedures your company has developed or, if your plan has Online Contribution Changes, via The frequency that participants are allowed to change this amount will depend on your plan document. A participant can request the change online at any time but the employer should not implement the election outside of the plan defined frequency. Question 3: Is there a minimum salary deferral amount that a participant must elect on the Enrollment Form? Your plan document may require a minimum salary deferral amount. Please refer to the Plan Document or contact your Relationship Manager to determine if your plan has this requirement. Question 4: Is there a maximum salary deferral amount that a participant is able to elect during the enrollment process? The Internal Revenue Service imposes a maximum dollar amount on deferrals each year. This maximum is included in your plan s Plan Information which can be found on the website under Shortcuts > Access Forms > Plan Information. Participants can access this information under My Plans > Documents > Plan Information. The maximum a participant can defer is based on a calendar year period per individual. Any employee who has deferred into another employer s 401(k)/403(b) plan must adjust the amount he or she contributes into your plan by the amount he or she has already contributed during the current calendar year. Your plan document may place a limit on the maximum salary deferral amount or percent. Participants are not allowed to elect an amount or percent above this limit. Please refer to the Plan Document or contact your Relationship Manager to determine if your plan has this requirement. Question 5: Who is a beneficiary to the plan? A beneficiary to the plan is a person designated by the participant to receive a benefit under the plan upon the death of the participant. Question 6: Can a participant designate a non-spouse primary beneficiary if he or she is married? A participant may designate a non-spouse beneficiary if he or she is married provided his or her spouse signs the Spousal Consent on the Beneficiary Form and the spouse s signature is witnessed by a notary public or Plan Representative. Question 7: What if a participant was single at the time of initial enrollment? As long as the participant was married at the time of death, the participant s spouse will be the automatic beneficiary under the plan and will receive the death benefit. 9

10 Enrollment Question 8: What if a participant does not enter a beneficiary? Will this hold up the enrollment process of the participant if no beneficiary information is received? If no beneficiary is elected, the enrollment into the plan will not be delayed. Every effort should be made to encourage participants to designate a beneficiary by making the designation online at If no beneficiary election is provided, the death benefit will generally be paid in the following order: to the participant s surviving spouse, the participant s children, the participant s surviving parents, or the participant s estate. Question 9: How does a participant enrolling in the plan online establish their own User Name and password? Part of the Online Enrollment process is establishing a User Name and password. After a participant has completed the Online Enrollment process, in future visits he or she will login to using the User Name and password they have chosen during the enrollment process. Question 10: How do participants account for catch-up contributions when enrolling online? In plans that allow for catch-up contributions, participants who are age 50 or older can choose to make contributions in excess of the annual dollar limit imposed on elective deferrals. The extra salary deferral contributions are not considered catch-up until after the annual limit or a plan imposed limit has been reached. When enrolling online, catch-up eligible participants should indicate the total amount of salary deferral contributions, including catch-up contributions, to be deducted from participant s pay. Amounts qualifying as catch up are automatically determined. Question 11: If a participant failed to make investment elections and subsequently had funds deposited into the default investment, how does the participant move his or her money into designated investments? A participant can transfer between accounts using the change investments link on the Participant website or by using the toll-free automated telephone system at

11 Contribution Submission Overview... p 12 Contribution Submission Description for Ongoing Payrolls... p 12 Contribution Submission Instructions for Ongoing Payrolls... p 12 Rollover Contribution Submission Description... p 13 Rollover Contribution Submission Instructions... p 13 End of Year Employer Contribution Submission Description... p 14 End of Year Employer Contribution Submission Instructions... p 14 Loan Payoff Description... p 14 Loan Payoff Instructions... p 15 Frequently Asked Questions... p 16 11

12 Contribution Submission Overview Generally, there are four types of contribution submissions in most retirement plans: Contribution submissions of on-going salary deferral, matching contributions (if applicable) and loan repayments Rollover contribution submissions of direct rollovers coming from other retirement plans or Individual Retirement Accounts (IRAs) End of the year employer contribution submissions such as profit sharing or safe harbor contributions, and Loan payoff submissions of participant loan payments in full Each of these submissions to the plan has similar but unique processes associated with it. This section outlines each contribution submission type and provides detailed instructions to ensure proper processing. Contribution Submission Description for Ongoing Payrolls Whether you process your payroll in-house or have a payroll service provider, we want to make payroll contribution submissions as simple as possible. Payroll contribution submissions will be the most frequent transactions processed in your retirement plan. How often these contributions are submitted will depend upon the frequency of your pay periods (monthly, semi-monthly, bi-weekly or weekly). The Department of Labor (DOL) has stated that the contributions for audited plans (those with 100 or more participants) should be made as soon as administratively possible. The DOL typically interprets as soon as administratively possible to mean as soon as the contributions can reasonably be separated from the general assets of the employer. Generally, this separation should occur at the same time as other payroll withholding (i.e. payroll taxes or social security withholding). Therefore, we strongly recommend depositing your payroll contribution as soon as possible at the end of each payroll period. For plans that are not audited (those with less than 100 participants), there is a safe harbor rule where employee contributions must be made to the plan by no later than the seventh business day following the time the employee could have otherwise received cash. An adjustment made to contributions that result in a negative entry for any participant should not be included on the contribution file. These negative contributions require special processing. Please refer to Frequently Asked Question #5 later in this section for proper processing of these negative contributions. Contribution Submission Instructions for Ongoing Payrolls Click here to launch the educational video tutorial on How to Upload a Payroll File, or follow the steps below: STEP 1: Create a.csv, Excel, or text file that contains the following data for the new employee: Required Column Description Minimum Maximum Character Length Character Length Payroll Date Payroll Date 6 8 EE Status EE Status 1 15 Plan ID Plan Identification Number 7 7 SS Number Social Security Number 9 9 Last Name Surname 1 25 First Name First Name 1 15 Address 1 Address 1 35 City City 1 35 State State 1 35 Zip Zip 5 9 EE Location EE Office Location 1 20 Employment End Date Last Date of Employment 6 8 Birthdate EE Birthdate 6 8 Hire Date EE Most Recent Date of Hire 6 8 EE Hours EE Hours for Pay Period 1 6 The file should not contain formulas, addresses or special formatting. The columns in this example are required when adding new participants to the plan. However, please note that Plan ID s are only required if more than one plan s data is included on the file. STEP 2: Go to and login as Sponsor Access by selecting the role of Sponsor Access. If you do not know whether you are set up with Plan Sponsor access through please contact your Relationship Manager. 12

13 Contribution Submission STEP 3: Click the Shortcuts menu, then select Upload Payroll File from the dropdown menu under My Plans. STEP 4: On the payroll screen, select Import Payroll. STEP 5: On the Import Payroll window, select Browse to find and select the payroll file you created for upload. Select the appropriate file format from the Existing Formats dropdown menu. Click Upload and Review. STEP 6: Upon file upload completion, you can then begin to edit the payroll file. If the information entered does not match plan attributes, you will be presented with an Error message alerting you that a correction on the participant data is needed before you can proceed. STEP 7: Once you have corrected any errors, you will have the opportunity to review the Payroll Details and then click Submit. You will then be redirected back to the payroll home page. STEP 8: On this page you will Fund Your Payroll. From the Actions drop down menu, click on Fund. If the payroll has ACH as the funding method chosen, you will simply enter the amounts that come from each bank account for all locations. If the plan has forfeiture dollars available for use, you may use them to offset the payroll contribution by entering the amounts in the forfeiture section. Any entry here will offset the amount you have funded. Select Continue. STEP 9: The final step is to verify your data, and then enter a valid address to receive your process confirmation . If this is your first time uploading a payroll file, verifying the money type and source will be particularly important. Click Submit. Your payroll file will now be processed. Payroll files submitted after 3:00 pm Central Standard time will be processed on the following business day. STEP 10: Once you have successfully submitted the file, the file is in a Held status. Status changes to Confirmed once funding is received and the contributions have been invested. Participants may view contributions posted to their accounts within one (1) business day of the deposit by logging into their participant access site via Rollover Contribution Submission Description Rollovers can come from a variety of sources including other qualified plans, Individual Retirement Accounts (IRAs), 403(b) plans, or other retirement plans. Please refer to your plan document or check with your Relationship Manager to determine if your plan allows for rollovers and which types of rollovers are accepted into your plan. Rollover Contribution Submission Instructions STEP 1: Forward the form entitled Rollover Acceptance Form to the participant. Plan Sponsor instructions to obtain a Rollover Acceptance Form**: A. Go to and login as Sponsor Access by selecting the role of Sponsor Access. If you do not know whether you are set up with Plan Sponsor access to please contact your Relationship Manager. B. Click on My Plan, Library, then Forms. C. Choose the requested form (Rollover Acceptance Form) from the list of forms. D. You can either Print or Save the form to your desktop. **To ensure that you have the most current form, please be sure to download a new form each time. Note: Participants login as Participant on and may obtain the form following the same process (B through D) above. STEP 2: The participant completes the form and returns it along with the rollover check to your office. The rollover check must be made payable using instructions found on the Rollover Acceptance Form. 13

14 Contribution Submission STEP 3: Upon receipt of the form and the check from the participant, review the form for completeness, and sign and date the bottom of the Rollover Acceptance Form as the Accepting Employer. STEP 4: Instructions on where to forward the Rollover Acceptance Form and the rollover check are found on the form. STEP 5: The rollover check will be deposited and proceeds posted to the participant s account within seven (7) business days after the check and form are received in good order as instructed on the form. Participants may view the posting of their rollover contribution when they login to End of Year Employer Contribution Submission Description Your plan may provide for profit sharing, top-heavy minimums, Qualified Non-Elective Contributions (QNEC) or safe harbor contributions to participant accounts. These contributions are generally deposited after the end of the plan year. Your Relationship Manager will work with you to determine the correct amount and allocation of these types of contributions. End of plan year employer contributions will need to be remitted to Newport Group by secure upload and not by following the same steps that you used to remit your ongoing payroll contribution files. Your Relationship Manager will provide you with instructions on how to upload the contribution file for these year-end employer contributions to a secure website. End of Year Employer Contribution Submission Instructions STEP 1: Contact your Relationship Manager to upload the contribution file to a Newport Group secure website. STEP 2: After Newport Group has received the contribution file, your Relationship Manager will provide you with a confirmation that the contributions are in process. If your plan is set up with ACH Authorization and Newport Group will be initiating the debit, please ensure that the funds are available for this transfer. STEP 3: Provided you are not otherwise set up with ACH authorization, you may initiate the wire/deposit of your contributions to the plan custodian upon receipt of this confirmation from your Relationship Manager. STEP 4: Newport Group will invest the funds and update the participants accounts. Participants may view contributions posted to their accounts when they login to Loan Payoff Description Participants with outstanding loan balances may wish to pay off their entire loan early. There is no prepayment penalty associated with loan payoffs. Loan payoffs may be made to the plan in the form of a personal check from the participant. The Plan Sponsor may calculate and freeze the outstanding loan balance through the website. Note that the loan payoff amount shown on the website does not include loan repayments that have not been traded or are in transit (pending). Please contact your Relationship Manager if you need help in calculating and/or freezing the loan payoff amount. Participants that call Customer Service to obtain loan payoff amounts will be instructed to contact their employer so that the employer may freeze the loan and stop future loan repayments. 14

15 Contribution Submission Loan Payoff Instructions STEP 1: Calculate the payoff amount. A. Login to B. Select My Participants, Requests, Loans C. Locate the participant from the listing and select CALCULATE from the Calculate Payoff Column. D. From the drop down box, select the loan ID for the specific loan to payoff or ALL if all outstanding loans should be paid off. Enter the Payoff Date. Note that any repayments that have been withheld from the participant s pay but have not been posted into his or her account are not included in the calculation. E. Select Calculate. If the information is correct and the participant is ready to repay the loan, select Freeze. STEP 2: Communicate the loan payoff amount to the participant so that a check can be written immediately. The check should be made payable in the same manner as a Rollover check. STEP 3: After the payoff check has been received, contact your Payroll Department or payroll provider to stop any future loan repayment deductions for this participant. STEP 4: Submit the loan payoff proceeds based on the instructions provided by your Relationship Manager. The payoff should be submitted prior to the Loan Frozen Through Date. STEP 5: Upon receipt of the loan payoff, Newport Group will invest the funds and update the participant s account. The participant can expect to see this transaction posted within seven (7) business days after receipt of the funds provided they are in good order. Participants may view the posting of their loan payoffs when they login to 15

16 Contribution Submission Frequently Asked Questions Payroll Processing: Question 1: Does the Contribution Information file need to include all the information listed on the File Format instruction sheet? Generally, yes. There may be some fields that are not applicable to your plan but generally, Newport Group will need all fields included to process contributions. A representative of Newport Group will provide you with the applicable fields that apply during the initial conversion. Question 2: Can I fax you the contribution file? The contribution file must be provided electronically via the web site. Please refer to the section entitled Contribution Submission Instructions for step-by-step instructions. Question 3: Why do I have to provide dates on each contribution file? There are several reasons why Newport Group requires you to provide dates (birth date, most recent hire date, and termination date). Participants dates of birth are used for multiple reasons, including as the initial identifier for logging on to the website, in determining eligibility and the default investment when target dates funds are used, and in distribution processing. Dates of hire are used in determining eligibility and calculating vesting. Dates of termination are used in vesting calculations and to determine eligibility for distributions and loans. Question 4: Can the contributions be made in a form other than a wire transfer? The preferred method for submitting contributions is through ACH debit transfer. ACH debit transfer is an easy and reliable way to remit contribution funding and is generally less expensive than a wire transfer. If this is not already set up for your plan, please contact your Relationship Manager to assist you in the steps needed to set up ACH debit. Question 5: What if my contribution file includes adjustments to an individual participant s contribution that results in a negative contribution? Are these contributions processed differently? Negative contributions cannot be included in a contribution file and must be processed on an individual basis outside of normal payroll processing. Contact your Relationship Manager if you need to request processing of a negative contribution. Any negative contributions listed on your contribution file will be rejected. Question 6: When do salary reduction contributions need to be made? The Department of Labor (DOL) has stated that for small plans, the current safe harbor rule is for employee contributions to be deposited into the trusts within seven (7) business days of the check date. For larger plans (those with 100 or more participants), the rule is for payroll contributions to be deposited as soon as administratively feasible and may be viewed as late if the deposit is made after a consistent pattern of other payroll deposits. For example, if you consistently deposit your payroll contributions within three business days of a check date but deviate from this pattern one or more times during the year, the DOL could construe those contributions made to your plan after three (3) business days as late. 16

17 Contribution Submission Question 7: How are incorrect contributions corrected? It is important that the information provided to us in the contribution file is accurate. If it is determined that some information is incorrect, Newport Group will work with you to correct the error. Contact your Relationship Manager to discuss the specific situation and data requirements to correct. Question 8: What happens to contributions for plan participants who have not made an investment election? If a participant is listed on your contribution file and this participant has not made investment elections, these contributions will be invested in the default fund under your plan. If a participant s contributions have been invested into the plan s default fund, the participant should be encouraged to enter his or her investment elections online if they do not want to remain invested in the plan s default fund. Once elections are entered, any future contributions will be invested based on the participant s elections. Rollovers: Question 9: Does an employee need to provide the plan with any documentation relating to the type of plan and the qualified status of his or her former employer s plan in order to facilitate a direct rollover into our plan? Your plan may not accept all sources of rollover contributions (401(a) plans, 403(b) plans, 457(b) government plans, IRAs). The Rollover Acceptance Form includes a section that indicates the source of the rollover. If the employee signs this section, he or she is representing that the transferor plan is a certain type of plan and that he or she believes that this rollover contribution is eligible for acceptance into your plan. This representation will be sufficient to allow a direct rollover into your plan. Question 10: Does an employee have to be eligible to participate in the plan before he or she is allowed to roll over his or her other retirement accounts into our plan? You will need to check your plan document or contact your Relationship Manager to determine if an employee must meet the eligibility requirements prior to being allowed to roll over his or her other retirement accounts into your plan. Question 11: Will a rollover check that is made payable to the plan be accepted for deposit into the participant s account? Instructions for how the rollover check should be made payable are found on the Rollover Acceptance Form. If the rollover check is not made payable using these instructions, generally an officer of the Employer can endorse the back of the check to the Plan s custodian. Question 12: Can Newport Group initiate a rollover distribution on behalf of a participant? No, the participant must request the rollover distribution from his or her prior plan or IRA. Loan Processing: Question 13: Can the participant obtain loan payoff amounts on the website? The account information on the website does not include any loan payments in transit. To ensure that correct loan payoff amounts are provided to the participant, please contact your Relationship Manager. 17

18 Contribution Submission Question 14: How should the loan payoff check be made payable? Loan payoff checks should be made payable in the same manner as a Rollover check. Please refer to the section entitled Rollover Contribution Submission Instructions on how to obtain this form from the website. Question 15: If my plan allows for only one outstanding loan, how soon after paying off his or her first loan can a participant take a new loan? Once the funds have been received in good order and the payoff has been processed, the participant can request another loan. The participant can view the posting of these funds when they login to the website. 18

19 Distributions Upon Separation From Service Overview... p 20 Separation from Service Distribution Description... p 20 Online Distribution Description... p 21 Online Distribution Instructions... p 21 Distribution Due to Termination, Retirement or Disability Submitted Via Form... p 21 Death Distribution Description... p 22 Death Distribution Instructions... p 22 Outstanding Loan Issues Upon Separation from Service... p 23 Reporting Distributions on Form 1099-R... p 23 Frequently Asked Questions... p 24 19

20 Distributions Upon Separation From Service Overview Generally, a participant can take a distribution of his or her account balance in the plan if the participant leaves the employer due to: Termination of employment Normal retirement Early retirement (if allowed in your plan) Disability Death In this section, you will find instructions on our paperless option Online Distributions to process distributions due to separation from service. For distributions that do not qualify for on-line processing, you will also find instructions on the preparation and completion of distribution paperwork. A participant qualifies for normal or early retirement (if applicable under the terms of your plan) if the conditions of age and/or service are met as outlined in your Plan Document. You should refer to the plan document for the definition of total and permanent disability before concluding that a participant qualifies for a disability distribution under the plan. Finally, if a participant passes away, the beneficiary will have to be confirmed by either reviewing the Beneficiary Form stored in the employee s personnel file or by looking up the beneficiary on the website. The participant would have completed the beneficiary information when first enrolling in the plan or if the participant updated the beneficiary. Please refer to the Death Distributions subsection for step-by-step instructions on death distribution procedures. Separation from Service Distribution Description A participant is eligible to receive a distribution due to termination of employment. If you are unclear about whether a participant is terminated, please check with your Relationship Manager. For example, an extended leave of absence does not constitute a termination of service. Therefore, a distribution under the plan would not be warranted in the event of a leave of absence. Each participant will need to complete distribution paperwork prior to the release of his or her account balance from the plan. Many of our clients establish an Exit Package that includes plan distribution paperwork along with other important information. This Exit Package would be provided to the terminated employee at the time he or she leaves your employment. By including the distribution paperwork in this package, you are assured the terminated participant has received the necessary paperwork in a timely manner. Participants and Plan Sponsors can obtain distribution paperwork from the website. Participants may visit to see that the liquidation of their account has occurred. Depending on your plan document s provisions, but in general, a participant may choose to keep his or her account balance in the plan, provided the vested account balance is at least $5,000. If a participant has a vested balance of at least $1,000 but no more than $5,000, with proper notification, the Plan Administrator may choose to initiate an Automatic Rollover to an Individual Retirement Account (IRA) on behalf of the participant without the participant s consent. Please contact your Relationship Manager for more information about your plan s Automatic Rollover options. 20

21 Distributions Upon Separation From Service If your policy is to force a cash distribution from the plan for those terminated participants with less than a $1,000 vested balance, please contact your Relationship Manager to determine the necessary steps to take. Please refer to Frequently Asked Question #4 in this section for more information on forced distributions. Online Distribution Description Online Distribution is a quick and easy way for your employees to request a distribution from the plan using the Internet. To request a distribution, the participant logs onto and follows the online instructions. An option can be added for plan sponsors to approve online distribution requests prior to Newport Group fulfilling the request. Online Distribution Instructions STEP 1: Sponsor provides termination date on the payroll file. STEP 2: Participant logs on to A. Click My Plans, Distributions then Withdrawals; on the next screen click on Request a Withdrawal. B. The step-by-step instructions will then be presented to the participant including: a. Acknowledgement of the Special Tax Notice b. Indication of the reason for the request. Note for a participant to request a distribution due to separation from service, a termination date must have been provided by the sponsor prior to the participant s request. c. Selection of how funds should be paid (directly to participant or rolled over) d. Ability to confirm selections prior to submitting e. Or the participant can contact Newport Group to request the distribution at (888) STEP 3: If your plan is set up for sponsor approval of an Online Distribution, you will receive an from Newport Group notifying you that a participant has requested a distribution online. Go to to approve the request. STEP 4: Newport will liquidate the participant s account and initiate the check or ACH. The standard processing time for requests received in good order is ten (10) business days after Newport Group receives an Online Distribution request. Distribution Due to Termination, Retirement or Disability Submitted Via Form STEP 1: Participants and Plan Sponsors can download the distribution paperwork from Instructions to obtain distribution paperwork: A. Log in to Click on My Plans, Library and Forms. B. Choose Terminated Participant Withdrawal from the list of forms. **To ensure that you have the most current application, please be sure to download a new form each time. STEP 2: The participant completes the form. For distributions due to termination or retirement, the participant checks Ended Employment or Retirement as the Reason for Payment. For distributions due to disability, the participant checks Other as the Reason for Payment and indicates Disability in the explanation. 21

22 Distributions Upon Separation From Service STEP 3: If the distribution requires sponsor approval, the form is returned to the sponsor for review and approval. Once approved, the form should be sent to: Newport Group, Inc. Attn: Distribution Department 35 Iron Point Circle, Suite 300 Folsom, CA (888) Fax number: (816) STEP 4: Newport will liquidate the participant s account and initiate the check or ACH. The standard processing time for requests received in good order is ten (10) business days after Newport Group receives the request. Death Distribution Description The death of an employee can be a difficult time for your company. We appreciate that distributions due to death will require additional guidance. Please contact your Relationship Manager to thoroughly discuss these types of distributions before you proceed. Death distributions require gathering additional information including determination of the beneficiary(ies). Death Distribution Instructions STEP 1: Obtain the name of the primary beneficiary(ies). This can be determined from either the Beneficiary Form located in the personnel file of the deceased employee or, if the participant designated their beneficiary online, you may view the named beneficiary via the website. STEP 2: Forward the Terminated Participant Withdrawal form along with a letter of instruction to the primary beneficiary(ies) of the deceased employee. Plan Sponsor instructions to obtain the distribution form: A. Go to and login as Sponsor Access by selecting the role of Sponsor Access. If you do not know whether you are set up with Plan Sponsor access to please contact your Relationship Manager. B. Click on My Plans, Library and Forms. C. Choose the Terminated Participant Withdrawal from the list of forms. D. You can either Print or Save the form to your desktop. **To ensure that you have the most current form, please be sure to download a new form each time. STEP 3: The beneficiary should check the Death box as the Reason for Payment on the distribution application. Once this form is completed, the beneficiary should return the form to the sponsor for approval. Once approved, the form should be sent to: Newport Group, Inc. Attn: Distribution Department 35 Iron Point Circle, Suite 300 Folsom, CA (888) Fax number: (816) requests@newportgroup.com 22

23 Distributions Upon Separation From Service STEP 4: Newport will liquidate the participant s account and initiate the check or ACH. The standard processing time for requests received in good order is ten (10) business days after Newport Group receives the request. Outstanding Loan Issues Upon Separation from service If a participant separates from service with an unpaid loan balance, he or she will need to know how the loan will be treated. The participant should reference the Summary Plan Description for details related to the treatment of loans following separation from service. If the plan requires that the loan is due and payable on the date of separation, the amount owed will be treated as a taxable distribution if the participant does not pay the loan in full within the timeframe outlined in the Plan s Loan Policy. Early withdrawal penalties may apply. If the participant wishes to pay the loan off in full, he or she should be instructed to write a personal check for the outstanding principal. The participant can receive a loan payoff quote by contacting our Customer Service team at (888) Alternatively, you, as Plan Sponsor, can calculate a loan payoff through the plan sponsor website or contact your Relationship Manager to obtain the correct loan payoff amount. Reporting Distributions on Form 1099-R To report distributions to the Internal Revenue Service and state governments, the Plan s paying agent will prepare Form 1099-R for each participant who received a direct rollover or cash distribution during the taxable year. The IRS and state copy of the Form 1099-R will be submitted directly to the IRS and state government and the participant s copy will be mailed to each participant no later than January 31 of the year following the calendar year in which the distribution occurred. 23

24 Distributions Upon Separation From Service Frequently Asked Questions Question 1: What are the distribution options under the plan for terminated participants? Terminated participants have several options with respect to the distribution of their plan balances. When they leave the company, they will be given the opportunity to either roll over their balance to another retirement plan or Individual Retirement Account (IRA), or they may elect to receive a cash distribution. Keep in mind that a participant who elects a cash distribution will be required to pay taxes and any applicable penalties. Question 2: How long will it take to process a distribution request? To ensure accurate processing, the terminated participant can expect to receive his or her distribution within 10 business days from the date Newport Group receives the distribution request in good order. This 10 business day period does not include mail, wire transfer or ACH transfer delivery time. Expedited delivery of distribution proceeds may be available for an additional fee. All checks, rollover or cash distributions, will be mailed to the participant s address of record unless specifically instructed to do otherwise. Question 3: Can a participant maintain his or her account in the plan after termination of employment? In general, a participant can choose to keep his or her money in the plan provided the vested account balance is at least $5,000 (excluding rollovers). Provisions in your plan document may be more restrictive, however, so please refer to this document or contact your Relationship Manager for more precise information. Question 4: What is a forced distribution? A forced distribution may occur if a terminated participant with less than $5,000 vested in his or her account has been notified to take a distribution from the plan but has not made an election as to the disposition of that account. Please note that an active employee may not be forced out of the plan. Provided you know that the participant received the notification and you have the participant s current address, you may force a distribution after a reasonable period of time. If the account balance is under $1,000, a cash distribution may be processed and mandatory withholding will be applied. For terminated participants with vested account balances between $1,000 and $5,000, the Plan Administrator may establish an Automatic Rollover to an Individual Retirement Account (IRA) on behalf of the participant. Please contact your Relationship Manager to discuss the force out procedures. Question 5: Can a participant take a partial distribution from the plan? In general, partial distributions are not allowed. See your Relationship Manager to discuss the provisions of your plan document. 24

25 Distributions Upon Separation From Service Question 6: What about vesting? The only accounts in your plan that are potentially subject to vesting are Employer Non-Elective contribution accounts (profit sharing or money purchase contributions, for example) and/or Employer Matching accounts. Other money types (employee deferral accounts (both pre-tax and Roth), employee rollover accounts, and employer safe harbor, for example) are not subject to a vesting schedule. Newport Group will calculate the vested portion of each employee s account balance based on the vesting schedule as prescribed in your plan document and the data provided on the payroll file before any distribution check is released. Question 7: What tax liability will a participant incur at the end of the calendar year if a cash distribution is elected? If a participant chooses to have plan benefits paid in cash, mandatory withholding will be credited against his or her tax owed at the end of the year. Withholding does not eliminate the potential need to pay additional taxes. The total tax liability plus applicable penalties owed on any cash distribution will depend upon the participant s age at the time of the distribution and tax bracket when taxes are filed. Question 8: What effect does an outstanding participant loan have on a terminated participant s distribution? If a participant terminates employment with an unpaid loan balance, he or she will need to know how the loan will be treated. His or her loan balance is due and payable on the date of termination, or no later than the end of the grace period (the end of the calendar quarter following the calendar quarter in which the date of termination falls). If the outstanding principal is not paid in full by the end of the grace period, the amount owed will be treated as a taxable distribution and a 10% early withdrawal penalty may apply. If the participant wishes to pay the loan off in full, he or she should be instructed to write a personal check for the outstanding principal. Please have the participant contact our Customer Services group at to obtain the correct outstanding loan balance. Question 9: What is the tax due on a death benefit payable to a surviving spouse beneficiary? Nonspouse beneficiary? If a participant passes away and has designated their surviving spouse as the beneficiary, the spouse beneficiary may elect to roll over the account balance to an Individual Retirement Account (IRA) or to another retirement plan. A non-spouse beneficiary may roll over the account balance to an inherited IRA. In so doing, the beneficiary can avoid current tax liability. Beneficiaries may also elect a cash distribution and pay the mandatory federal tax withholding at the time of distribution. No early withdrawal penalties will be applied to a death benefit paid in cash to any beneficiary. Question 10: Can a beneficiary of a deceased participant elect to keep the account balance in the plan indefinitely? In the event the beneficiary wants to keep the account balance in the plan, he or she may do so up to 5 years following the death of the participant. Your plan document language will govern when a death distribution must be paid out. Please check this document or contact your Relationship Manager for specific guidelines. 25