PAISBOA Carroll Consultants, Ltd.  Patrick Gallagher, CEBS

The Written Plan RequirementFollowing the Terms of the PlanMandatory vs. Optional ProvisionsOperational Issues & Common Written Plan ErrorsAvoiding Plan ErrorsOther IRS ViolationsFix-It Guides – Common Problems, Real Solutions

 Types of Plans ◦ ERISA ◦ Church Plans ◦ Non-ERISA

 Types of Documents ◦ Prototype ◦ Volume Submitter ◦ Individually Designed

EligibilityCompensation Employer Contribution Distribution Options Written Plan

Mandatory EligibilityBenefitsLimitationsDistributionsInvestments

 Universal availability for employee deferrals  Can exclude:  Student Employees  Participants in another plan  Non-Resident Aliens  Employees who normally work less than 20 Hours per week

o Non-Discrimination requirements o Definition of Compensation o Year of Service definition

o Employee deferral – 402(g) Limit o All contributions – 415 Limit o Compensation – 401(a)(17) Limit

Timing of Benefits Form of Benefits

Vendors available Participant Directed Provisions

Optional Automatic Enrollment Mandatory Employee Deferrals Roth In-Service withdrawals Rollovers & Plan to Plan Transfers Catch-up contributions Termination of the Plan HardshipsLoans Employer contributions Vesting

 Advantages  Increase Participation  Solve failing ACP Test  Disadvantages  Annual Notices  Participants with small balances

 Condition of employment  Do not count toward 402(g) Limit

 After-Tax employee deferrals  Earnings grow tax-free  New 1/1/2013 – In Plan Roth Conversion

Age 59 ½ - earliest date for employee deferrals Define Sources Available

Helps employees consolidate and manage retirement investments Transfers are difficult to administer

15 Years of Service Age 50

Preserves the Employer’s right to terminate

IRS Safe Harbor Reasons Can allow for any heavy and immediate financial need Define Sources Available

 Define minimum/maximum loan  Interest rate charged  Number of years to repay  Repayment method  Number of loans outstanding  When loan defaults

 Matching Formula  Non-elective Contribution

 Most plans 100% immediately  3 year cliff  2-20 schedule

 Plan not adopted on or before 12/31/2009  Haste in adopting written plan resulted in errors  Operation not following the written plan document

Follow the terms of the plan Timely transfer of contributions Conduct periodic reviews Update for recent law changes Nondiscrimination Testing Form 5500 Reporting

√ Review plan document √ Compliance testing each year √ Monitor employee deferral and catch-up limits

 Universal Availability  Ineligible employers  Plan Loans violate IRC 72(p)  Hardship distribution failures  Late deposit of employee elective deferrals  Plan transfers

Common ProblemsReal Solutions You have not updated your plan document effective 1/1/2009 Adopt plan now and update to prototype during remedial amendment period Failed to follow plan terms Apply reasonable correction method See Rev. Proc Definition of compensation was not applied correctly Corrective contribution or distribution Missing Employer contributions Corrective contribution

Common ProblemsReal Solutions Plan failed nondiscrimination testsMake qualified non-elective contributions for the non-highly compensated employees or refund excess contributions to HCEs A participant exceeded IRS Plan limits Process an excess deferral distribution Late deposited employee deferralsDeposit all late deferrals and earnings resulted from late deposit – see DOL lost earnings calculator at VFCPcalculator/webcalculator.aspx

Common ProblemsReal Solutions Participant loans do not conform to IRC 72p Modify loan terms or send a corrective payment Hardship distributions not made properly Amend plan retroactively to allow hardships or have participant return hardship distribution with earnings Did not file Form 5500File all delinquent returns IRS Fix-It Guide for 403(b) Plans coming soon: --Common-Problems,-Real-Solutions

How Can I Find Out More? Newsletters, Employee Plans News, Retirement News for Employers, Governmental Plans Updates  Marcie  Tom Giedgowd  Pat  Buzz Regulatory Guidance, Fiduciary Education, Investment Provider Analysis and Management, Investment Platform Plan Transition, Year-end Compliance Testing and Form 5500 Reporting, Plan Design Consulting & Employee Communication and Education