Important Approaching Deadlines Please make note of these important approaching deadlines for calendar year plans: April 1, 2019 Deadline to notify us of deferrals over the 2018 calendar deferral limit. Processing of corrective distributions of excess deferrals must be completed by April 15, 2019. Deadline for processing first year required minimum distributions (RMDs) for individuals who turned 70½ during 2018 and require an RMD. Deadline for filing Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, for the 2017 plan year for corrective distributions due to actual deferral percentage (ADP) and actual contribution percentage (ACP) test failures. Form 5330 is used to report and pay the excise tax of 10 percent of the corrective distributions due to failed ADP or ACP tests that were not distributed within 2 ½ months after the end of the plan year (six months if the plan has an EACA and provisions apply to all employees, not just employees hired after the EACA provisions were adopted). Date to notify OneAmerica of a scheduled audit date for filers of a 2018 Form 5500 series return that requires an audit. We recommend that audits are not scheduled before May 1, 2019. Same date for all plan years Same date for all plan years 15 months after plan year-end 3 months after plan year-end April 15, 2019 Deadline for processing of corrective distributions for 2018 calendar year deferral limit failures to avoid double taxation. Deadline for filing 2018 C-corporation tax returns or filing for an extension and contribution deadline for Same date for all plan years 3½ months after fiscal yearend
deductibility purposes for C-corporations if no filing extension is requested. If your plan year begins on a date other than January 1, please adjust the dates to coincide with your plan year. Not all deadlines are based on the plan year. Examples of deadlines not based on the plan year include those related to return of excess deferrals (April 15), a participant s first required minimum distributions (April 1) and Form 5330 filing for prohibited transactions (last day of the 7th month after the end of the tax year of the employer or other person who must file the Form 5330). Under Internal Revenue Code section 7503, when a deadline falls on a weekend (i.e., Saturday or Sunday) or a legal holiday, the performance of such acts shall be considered timely if completed the next business day. However, corrective distributions and contributions should be processed the day before the weekend or legal holiday.
403(b) Plan Restatement Update In July of 2007, 403(b) regulations were updated for the first time since 1964. The new regulations required that all 403(b) plans be maintained pursuant to a written plan that, in both form and operation, satisfied the final 403(b) regulations. All 403(b) plans, with the exception of church plans with no retirement income accounts, were required to adopt 403(b) plan documents no later than December 31, 2009; however, there was no formal Internal Revenue Service (IRS) approval process for the 403(b) plans. The IRS determination letter program that was available to qualified retirement plans was never an option to plan sponsors adopting 403(b) plans. In Revenue Procedure 2013-22 the IRS established a program for pre-approved 403(b) plan documents. Document providers such as OneAmerica were given the opportunity to submit documents to the IRS for approval. The program provided that once the IRS issued approval letters for the 403(b) plan documents, eligible employers would be required to adopt an IRS pre-approved plan. The restatement period for adoption of an IRS pre-approved plan is referred to as the remedial amendment period. In 2018 we announced that the IRS had approved the OneAmerica Financial Partners, Inc. 403(b) Volume Submitter Plan and the OneAmerica Financial Partners, Inc. 403(b)(9) Retirement Income Account Volume Submitter Plan documents. If you use OneAmerica document preparation services and currently have a 403(b) plan, you should have received an email that included an Acknowledgement for 403(b) Restatement form. The primary purpose of the Acknowledgement for 403(b) Restatement was to obtain confirmation that you wanted us to prepare your 403(b) restatement and that you agreed to the fee schedule that is based on when your completed Acknowledgment for 403(b) Restatement form is received. We have received many Acknowledgement for 403(b) Restatement forms and have begun preparing restatements; however, some forms are outstanding. The standard fee for a restatement is $1,500. This fee will increase based on when your Acknowledgement for 403(b) Restatement is completed and received by OneAmerica. If received before July 1, 2018, the restatement fee was $1,500. If received on or after July 1, 2018, but before July 1, 2019, the restatement fee is $2,000. If received on or after July 1, 2019, but before February 1, 2020, the restatement fee is $2,500. If your Acknowledgement for 403(b) Restatement is received on or after the February 1, 2020, deadline, an individual fee will be quoted and there will be no guarantee that your plan will be restated by the March 31, 2020, IRS 403(b) restatement deadline.
The restatement fee will be charged when the restatement has been drafted and emailed for signature. You will be billed based on the date your completed Acknowledgement for 403(b) Restatement form is received. Finally, please remember that all communications related to the restatement will be sent and received electronically. In order to ensure that you receive all notifications related to your plan document restatement, please verify that 403bLegislativeUpdates.RS@oneamerica.com is an approved email address and will not be blocked by your spam filter. OneAmerica is the marketing name for the companies of OneAmerica OneAmerica.com
Office Closed Friday, April 19 th In observance of the holiday, U.S. stock and bond markets will be closed on Friday, April 19 th. OneAmerica will also be closed on April 19 th and transactions requested on Friday will be processed on Monday, April 22 nd. Please contact us if you have any questions.
First Year Required Minimum Distribution Deadline is April 1 st April 1, 2019, is the deadline for processing first year required minimum distributions (RMDs) for individuals who turned 70½ during 2018 and require an RMD. Participants who fail to take their RMD may receive a tax penalty of up to 50 percent of the amount not distributed. Plans that fail to distribute an RMD could potentially be disqualified. Retirement plan participants and Traditional (non-roth) IRA owners are responsible for ensuring that the correct amount is distributed timely each year. The amount of the annual minimum distribution is based on the balance of the individual s account at the end of the preceding calendar year, the individual s life expectancy or the joint life expectancy of the individual and their beneficiary. Traditional (non-roth) IRAs RMD rules The first RMD must be taken by April 1 of the year following the year the IRA owner turns 70½, then by December 31 of each year thereafter. An IRA owner must calculate the RMD separately for each IRA that he or she owns, but he or she may withdraw the total RMD amount from one or more of the IRAs. Roth IRA RMD rules Owners of Roth IRAs are not required to take RMDs from their Roth IRA during their lifetime. Retirement plan RMD rules The RMD rules apply to all employer sponsored retirement plans including, profit sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. The rules also apply to SEPs, SARSEPS and SIMPLE IRAs. Generally, a retirement plan participant must take an RMD by the later of April 1 of the year following the year he or she reaches 70½ or April 1 of the year following the year in which they retire. However, if an individual is a more than 5 percent owner of the business sponsoring the retirement plan, the RMDs must begin by April 1 of the year following the year he or she reaches 70½, regardless of whether he or she is retired. The ownership attribution rules of Internal Revenue Code section 318 apply for purposes of determining ownership. The plan document may dictate that all RMDs must begin by April 1 of the year following the year the participant reaches age 70½. Please review your plan document to determine when RMDs must begin.
A 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts. RMDs required from other types of retirement plans, such as 401(k) plans and 457(b) plans, must to be taken separately from each plan. The Internal Revenue Service has published a frequently asked questions document about RMDs. Questions include: What types of retirement plans require minimum distributions? How is the amount of the RMD calculated? What happens if a person does not take an RMD by the required deadline? Is an employer required to make plan contributions for an employee who has turned 70½ and is receiving RMDs? We encourage you to review the complete list of questions and answers and share this information with your participants. See Retirement Plan and IRA Required Minimum Distributions FAQs.
Retirement Plan Legislative and Regulatory Update We are always monitoring legislative and regulatory developments that may affect retirement plans. Although an extremely small percentage of legislation that is introduced ever makes it out of committee and an even smaller percentage is signed into law, we will periodically highlight a few of the bills and share with you for information purposes only. The last session of Congress ended on December 31, 2018, and all legislation expired at that time. Below is a small sample of recently introduced legislation and key provisions affecting retirement plans that we re watching. It s important to note that these bills have only been introduced and no action or changes are required at this time. As always, we will make you aware of any changes that affect your plan or the administration of your plan directly. Retirement Security Act of 2019 (S. 321) Introduced February 4, 2019, by Susan Collins (R-ME). The bill would lower retirement costs by: Allowing more businesses to join multiple employer plans Direct the Department of the Treasury to combine and simplify plan notices Current status: Read twice and referred to the Committee on Finance. Retirement Enhancement and Savings Act (RESA) (H.R. 1007) Re-introduced February 6, 2019, by Ron Kind (D-WI) and Mike Kelly (R-PA). The bill would: Make it easier for small business to join multiple employer plans Require lifetime income projections on participant statements Extend the time period for participants who terminate with an outstanding loan to rollover the loan or pay it off Current status: Referred to the Committee on Ways and Means and the Committee on Education and Labor. Employer Participation in Repayment Act (H.R. 1043) Introduced February 7, 2019, by Scott Peters (D-CA). The bill would: Expand Internal Revenue Code section 127 Employer Education Assistance Program Allow employers to make student loan repayment assistance as an employee benefit up to $5,250 Current status: Referred to the Committee on Ways and Means
Increasing Access to a Secure Retirement Act (H.R. 1439) Introduced February 28, 2019, by Tim Walberg (R-MI). The bill would: Make it easier for plan sponsors to provide guaranteed lifetime income products Clarify the rules surrounding annuities Strengthen safe harbor protections for fiduciaries Current status: Referred to the Committee on Education and Labor
Save Important Plan Records Have you ever wondered what plan records you need to keep and for how long? Listed below are some general guidelines to assist you. Keep most records at least six years: Financial reports Form 5500 series return filings Nondiscrimination and coverage test results Retain plan records for the life of the plan: Complete plan document, including summary plan descriptions, summary of material modifications, plan amendments and any plan administrative procedures Other documents related to your plan such as trust documents, custodial agreements, group annuity contracts and/or funding instruments Copies of participant related notices such as explanation of joint and survivor annuity options, special tax notices and distribution election forms Copies of annual notices (e.g., safe harbor, automatic contribution arrangement), the list of who the notices were delivered to and the method of delivery Save participant information permanently: Participant age and service records used to determine eligibility, vesting, breaks in service and benefits Participant records including payroll, marital status, beneficiary designation and deferral election forms Participant account information While there is no requirement that you keep records in any particular format, it is recommended that records be kept in a manner that is easily retrievable. Please see Maintaining Your Retirement Plan Records for additional information. OneAmerica is the marketing name for the companies of OneAmerica OneAmerica.com I-25924 04/23/14
Correcting Excess Deferrals The deferral limit and rules for correcting excess deferrals differ by plan type. 402(g) Excess deferrals The 2018 Internal Revenue Code section 402(g) participant deferral limit for a 401(k) or 403(b) plan was $18,500. Any deferrals (both pre-tax elective deferrals and Roth contributions) in excess of this amount, adjusted for gains/losses, are required to be removed from the 401(k) or 403(b) plan by April 15, 2019. However, if the plan document permits catch-up contributions and the participant is eligible to make catch-up contributions, any portion of their excess deferrals that can be recharacterized as catch-up contributions (up to the $6,000 catch-up limit) does not have to be distributed. Requests for excess deferral refunds from a 401(k) or 403(b) plan must be received no later than April 1, 2019, to ensure that the refunds are processed by the required due date. 457(b) Excess deferrals 457(b) plans have their own separate deferral limit. This limit is described in Code section 457(e)(15). For 2018, the 457(e)(15) deferral limit was $18,500. For purposes of this limit, deferrals include participant elective deferrals, Roth contributions to a governmental 457(b) plan, employer non-elective contributions, and employer matching contributions to the 457(b) plan. Any deferrals in excess of this amount, adjusted for gains/losses, are required to be distributed from the plan. However, if the plan document permits catch-up contributions and the participant is eligible to make catch-up contributions, any portion of their excess deferrals that can be recharacterized as catch-up contributions (up to the $6,000 catch-up limit) does not have to be distributed. For 457(b) plans sponsored by a tax-exempt employer, the deadline to distribute excess deferrals, adjusted for gains/losses, is April 15, 2019. Requests for excess deferral refunds from a 457(b) plan sponsored by a tax-exempt employer must be received no later than April 1, 2019, to ensure that the refunds are processed by the required due date. For 457(b) plans sponsored by a governmental employer, excess deferrals, adjusted for gains/losses, must be distributed as soon as administratively practicable after the plan determines that the amount is an excess deferral. Please contact us if you have any questions.
Prepare For Your Form 5500 Series Return Filing Form 5500 series return filings for calendar year plans are due without extension on July 31, 2019. With extension, filings are due October 15, 2019. If OneAmerica provides Form 5500 series return preparation services for your plan, there are several things you should be thinking about now to ensure you are prepared to file the Form 5500 by the deadline. Consider the following: Have you obtained your credentials to file your Form 5500 or Form 5500-SF electronically? Have you remitted all of your contributions for the 2018 plan year? If you still have contributions to send, make sure you indicated a final deposit date on your census so that we wait to prepare your annual report until we receive all 2018 contributions. If your plan transitioned to OneAmerica during the 2018 plan year, have you provided us with prior Form 5500 filings as well as financial information for the period of time during the plan year that your plan was with your previous recordkeeper? We must receive all information by August 1, 2019, in order to complete your filing timely. Do you have a fidelity bond for your plan? Is your plan a small plan or a large plan? Generally, a plan with less than 100 participants as of the beginning of the plan year is a small plan and a plan with 100 or more participants as of the beginning of the plan year is a large plan. However, there is an exception to this method of determining the plan size. The exception is called the 80-120 Participant Rule. Under this rule, if the number of participants as of the beginning of the plan year is between 80 and 120 and a Form 5500 series return was filed for the prior plan year, the plan sponsor can elect to complete the return in the same category ( large plan or small plan ) as was filed for the prior return. For example, if a Form 5500-SF was filed for the 2017 plan year as a small plan, and the number of participants as of the beginning of the plan year that will be reported on the 2018 Form 5500 series return is 100-120, the employer can elect to complete and file the 2018 Form 5500 series return as a small plan. If your plan is a small plan, does it qualify under the Small Pension Plan Audit Waiver regulation? A small plan with all of its assets invested in the AUL group annuity contract would satisfy the waiver requirements. If your plan is a large plan or a small plan that doesn t qualify under the Small Pension Plan Audit Waiver regulation, have you made arrangements for an independent audit of your plan? Have you been remitting employee contributions and loan repayments timely? Information about late deposits must be reported and penalties may apply. Please view Timing of Contributions and Department of Labor Rules for additional information. If we provide Form 5500 series return preparation services for your plan, we will file a Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, within two months after year-end for terminated plans and
short plan year filings. A Form 5558 will be filed for all other plans only if they have not filed their Form 5500 within six and a half months after plan year end. For example, if the Form 5500 for a calendar year plan has not been filed by July 15, 2019 (initial filing deadline of July 31, 2019), a Form 5558 will be created and mailed to the Internal Revenue Service (IRS) on your behalf that will extend both the Form 5500 and Form 8955-SSA filing deadlines. For Form 5500, 5500-SF and/or 8955-SSA that are prepared after this date, we will automatically mark Box D on the Form 5500 (Box C on the Form 5500-SF and Form 8955-SSA). If the 5500 was not filed before six and a half months after plan year end and an extension was prepared, you must mark or verify Box D is marked on the Form 5500 (Box C on the Form 5500-SF and Form 8955-SSA) prior to filing electronically. In addition, we will file a Form 8955-SSA (if we provide Form 5500 series preparation services and if applicable) on your behalf. The Form 8955-SSA is used to report participants who terminated in the prior plan year who still had a vested account balance as of the last day of the current plan year, as well as participants who were previously reported on the Schedule SSA/Form 8955-SSA who took a full distribution during the current plan year. Please notify your day-to-day contact if you have any questions.