Annual Plan Review - Year End Package

Transcription

1 PLEASE NOTE NEW ADDRESS: 300 HARLEYSVILLE PIKE SOUDERTON, PA FAX: WEB: Annual Plan Review - Year End Package Plan Year End Information Request - Month/Day/2012 Company Name: ABC Company, Inc. Plan Contact: Bob Miller Plan Name: ABC Company, Inc. 401(k) Profit Sharing Plan Paragon Contact: Paragon Contact Number: The /2012 Plan Year for the ABC Company, Inc. 401(k) Profit Sharing Plan is now coming to a close. In order for Paragon to provide our annual administration and compliance services, please provide the census and Plan information listed below and on the following pages. The following documents are included in the Year End Package and need to be returned. We strongly encourage you to contact your Paragon Retirement Plan Consultant ("RPC") with any questions, or to assist you in completing the Questionnaire. Please complete and sign the Annual Plan Review Questionnaire All pages of the Annual Plan Review Questionnaire must be completed, signed where indicated, and returned Please complete and return the Census Information Request If you have made arrangements for your payroll service or accountant to provide this data directly to us, please forward the census request along with the compensation information from the following page. Please note the Census Spreadsheet (Excel) now contains a separate instructions tab along with the census data. When preparing the census data, please refer to the Compensation information located on the following page. Data provided should cover ALL employees that earned compensation during the 2012 plan year unless otherwise noted. (This includes part time and on call/per diem employees) Return the completed spreadsheet to us electronically in an Excel format. Do not print the spreadsheet and return via PDF or fax. Returning the census via a hardcopy format is reserved for clients with 5 or fewer employees. We reserve the right to charge an hourly rate of $70 for processing hardcopy census for more than 5 employees due to the additional labor required. PLEASE NOTE: Paragon will NOT be able to perform any discrimination testing or contribution allocations until BOTH the signed Annual Plan Review Questionnaire and census information are provided in good order. The IRS has stated that they are increasing their Plan audit activity, which makes the accuracy and completeness of this information critical. Why the return of this information is important to you: Timely processed ADP/ACP Test - If this test fails, you can avoid an IRS imposed 10% excise tax if refunds are processed within 2.5 months after the Plan year end. Timely Top Heavy Testing - if your test fails, it is important to know early since failure could require your company to fund a 3% contribution to all eligible employees. Timely Profit Sharing or True-Up Allocation Calculations- it is important to have this calculation prior to filing your company's tax return and as applicable, shareholder returns as well.

2 Compensation Information Please provide a copy of this page to the person preparing the Census Information spreadsheet Your Plan Document specifies that compensation be used for allocation purposes. On our website, you will find a spreadsheet describing what is included and excluded from this definition of compensation. Please visit and click on Compensation Definitions under Forms. It is important that you also review your Plan Document for any exclusions or special compensation provisions. The IRS has indicated that one of the most common errors in the operation of retirement plans found during a Plan Audit is the improper application of the definition of eligible compensation. Our records show that your Plan Document excludes the following type(s) of compensation by source: All Sources: Deferrals: Match/Safe Harbor Match (if applicable): Profit Sharing: Safe Harbor Non-Elective: Some information related to exclusions from compensation: Pre-Participation Compensation - compensation earned during the Plan year, prior to the participant's initial Plan entry date Reimbursements/Fringe Benefits - (cash/non-cash) including moving expenses, deferred compensation other than deferrals, and car allowance. Examples may be travel expenses that the employer provides, membership dues, and tickets to entertainment or sporting events. Bonuses, Overtime and/or commissions - additional testing is required when these are excluded Please note your Plan Document may have special compensation rules regarding the effective date of certain provisions. You may need to provide multiple compensation amounts. Short Plan Year - For Plan Years that are not a full 12 months, only provide compensation earned during the months that are included in the Plan Year. Important note for entities taxed as Partnerships or Sole Proprietorships: Sole Proprietorships, Partnerships and LLCs taxed as such have a special definition of compensation for retirement plan purposes. Compensation for sole proprietors or partners is net earnings from self-employment determined by deducting one-half of Self Employment tax and the deduction taken for the Plan contribution for the sole proprietor or partner. Since "earned income" is related to the individual's tax return, the amount of earned income should be provided by the firm's tax accountant. The employer contribution for the rank and file employees also affects this calculation, so there may be coordination required between Paragon and your tax accountant to determine the amount of earned income that is available for the Plan. If your company has any participants with net earnings from self-employment, please indicate when you expect the forms (i.e. K-1(s), Schedule C(s)) with income to be available. Please contact your RPC if you require any clarification regarding your Plan's definition of compensation. Paragon Contact:,,

3 Annual Plan Review Questionnaire Plan Year Ending: /2012 Please verify the information below and make any necessary changes or additions: 1. Plan Sponsor Information Employer Name: ABC Company, Inc., ABC Company, Inc. 401(k) Profit Sharing Plan Street Address: 123 Sample Road City: Anytown State: PA Zip: Phone:, Fax: Employer EIN: Entity Fiscal Year End: 2. Plan Contact Information Plan Contact: Bob Miller Address: Paragon RPC: We will send your year end reports on CD unless you specifically elect to receive hardcopy below: I would like to receive my year end reports via hard copy. (additional fees may apply) a. Our records indicate that the Plan Sponsor is a(n): 3. Entity / Ownership Information Has this changed? (Y/N) If Yes, what is your new entity type? If an LLC, how are you now taxed? Has this information changed for any other employers participating in your Plan? (Y/N) If yes, please explain on the enclosed Ownership Questionnaire Addendum b. List ownership as of the last day of the Plan Year. If changes occurred during the Plan Year, please indicate the date of the change. (You may attach additional pages if necessary) Shareholder/Company Owner Name Percent of Voting Stock Percent of All Stock Bob Miller 50 John Thomas 50 Date of Change

4 c. List family members of owners who are also employees - this is required to properly determine the Highly Compensated/Key Employees. Name Relationship Related To: Mary Thomas Wife Officer 2 d. Plan Trustee(s). Your Plan Document states that your current Trustee(s) are: Bob Miller If you would like to make any changes to the Plan Trustees, please have the Trustee(s) notify Paragon in writing to begin the process of updating your Plan and its operation. e. List Corporate Officers. Please confirm and/or indicate any changes that occurred during the Plan Year. Name Bob Miller John Thomas Officer Title Date of Designation (If during the past 12 months) f. Does your Plan benefit any collectively bargained employees? (Y/N) g. Did any leased employees* perform services for the employer at any time during the Plan Year? (Y/N) If yes, how many? *In general, a leased employee is an individual whose services you lease from any other person or organization and who has performed services for your company on a substantially full-time basis for at least one year and performs services under the primary direction or control of your company. h. Has any participant been on military leave during the year? If yes, please contact Paragon. (Y/N) (In some cases, additional Profit Sharing or other adjustments may be required) i. Did your company have a significant reduction of employees during the Plan Year? (Y/N) Retirement Plans that have a 20% or more involuntary (layoff) or reduction in force (RIF) during the Plan Year or over a series of Plan Years may require 100% vesting to affected employees. j. Does your company maintain another Retirement Plan? Our records indicate: If yes, please provide below a list of all Plans with their Plan Names, Numbers and Type of Plan. (such as Defined Benefit, Money Purchase, Profit Sharing, 401(k), Stock Bonus, ESOP, etc). We have indicated the Plan names of those Retirement Plans we are aware of.

5 4. Payroll Provider Information As providers become more automated, new opportunities arise for us to help you streamline your processes. Please confirm or provide the following data so that we may help you integrate as many of your processes as possible. Payroll Provider Name: Payroll Provider City: Payroll Provider State: How are contribution files submitted to your recordkeeper? If blank above, please confirm: prepares the file and submits the file (Client or P/R Provider) Payroll Provider Information Last Updated: **Required - Name of Insurance Company: Amount of Coverage: Extended Coverage: Bond Expiration Date: (Client or P/R Provider) 5. Fidelity Bond Coverage Information **Optional - Fiduciary Liability Coverage: Fiduciary Liability Insurance Company: Fiduciary Liability Coverage Amount: Fiduciary Liability Insurance Expiration Date: Obtaining a Fidelity Bond is an ERISA compliance requirement and is not optional. Each individual who handles funds must be bonded for at least 10% of the amount of plan assets he or she handles and never for less than $1,000 or more than $500,000 with respect to a single plan. Often, insurance providers blanket policies that cover any mishandling of funds rather than naming each individual separately. The bond amount must be reported on the Form This bond is not the same as Fiduciary Liability. Some Insurers offer extended Fidelity Bond coverage that increases automatically along with the assets of your plan. Please indicate if you have purchased this type of Extended Coverage and we will note it in our records. Fiduciary Liability insurance is optional, please contact your Insurance Agent if you are unsure if you have this type of coverage. 6. Retirement Plan Audit Generally a Retirement Plan with over 100 eligible participants including terminated participants with balances are required to have an independent audit completed. Please note there are exceptions. Does your Plan require an independent Plan audit due to the Plan's size? Based on our records: If you are unsure if your plan requires an audit, please contact your RPC. If your Plan does require an independent audit, please confirm that the auditor information below is correct for this Plan Year. If blank and you require a Plan Audit, please provide your auditors' information.

6 7. Controlled Group/Affiliated Service Group Determination Regardless of its size, a business needs to know whether it is part of a controlled group. Businesses that are members of a controlled group are typically treated as a single Employer for Retirement Plan purposes; these relationships affect the administration of your Retirement Plan. It is important for you to notify Paragon of the exact ownership of your company, any changes to that ownership, whethertherer are any other businesses that share common ownership to any extent with your business, and any other business transactions (e.g. mergers, stock or asset acquisitions or sales, etc.) affecting your company. Please note that even 50% ownership in another company could affect the allowable amount of contributions to this Retirement Plan and any additional Retirement Plans the owners may be a part of. Contact Paragon immediately if you have any questions regarding the implications of your company's ownership in other entities and how it relates to your Retirement Plan. Additional information and general definitions on this important determination can be found on the Controlled Group/Affiliated Service Group Outline, which is included in the Supplemental Information Package. a. Do any of the owners listed in section 3b have ownership in any other entities? (Y/N) A review of the information on file reflects that your controlled group status is: No If yes, please refer to the Ownership Questionnaire Addendum at the end of this packet. Please update with additional information as needed. Please note that this information is critical and necessary for us to assist you in determining if the company is part of a Controlled Group. b. Was your Plan a member of an affiliated service group during the year? (Y/N) A review of the information on file reflects that your affiliated service group status is: If yes, please provide Paragon with details of the affiliation c. Are any of these related businesses participating in your Plan? (Y/N) If yes, please review the list of participating employers on the Ownership Questionnaire addendum and modify, if applicable d. Has any business related as part of the controlled group or affiliated service group been involved in a merger, stock or asset transaction to any extent during this Plan Year? (Y/N) If yes, have you contacted your RPC to discuss this transaction and its' effect on your Retirement Plan? If not, please do so immediately.

7 8. Contribution Information If you desire additional quality assurance or your Plan's contributions cross Plan Years, please complete the Contribution Verification Detail section at the end of this questionnaire. To assist in our compliance testing and reconciliation of your Plan assets, please provide the following: The check date of your last payroll for the /2012 Plan Year: Last payroll for the /2012 Plan Year was submitted to the Recordkeeper on: Employer Matching Contributions The Plan Document indicates your match as Discretionary, funded on a basis and allocated using a formula of. 1. Has any Match been funded for this Plan Year? (Y/N) 2. If not, do you need Paragon to calculate the Match Contribution? (Y/N) (Paragon is able to calculate a match funded annually, including a Match True-Up if required by the Plan Document) If not referenced above or if it has changed, please confirm the Match Formula: $ per $1.00 of deferral up to % of compensation and (if applicable) $ of next % of compensation Employer Profit Sharing Contribution Information The Plan Document indicates your profit sharing as, with an allocation method of Pro Rata 1. Do you intend to fund a Discretionary Profit Sharing Contribution for this Plan Year? (Y/N) (Safe Harbor Profit Sharing is required, Discretionary Profit Sharing is optional) 2. Has any Profit Sharing been funded for this Plan Year? (Y/N) 3. If not, do you need Paragon to calculate the Profit Sharing Contribution? (Y/N) (Paragon is able to calculate a Profit Sharing funded annually) 5. If you intend to fund a Discretionary or are required to fund a Safe Harbor Profit Sharing contribution, please indicate the amount or percentage along with the expected funding date. (Generally this must be funded by the filing deadline for your corporate tax return. Please verify with your tax advisor regarding your specific funding deadline): Please circle one: Actual or Estimate Date: / / Additional Comments: Employer Contribution Allocations: If we are calculating an Employer Contribution (Annual or True-Up Match, Profit Sharing or Money Purchase) on behalf of this Plan Year, please notify us as soon as possible. We would like to discuss this amount with you before it is finalized to ensure that neither the Plan nor individual Participants exceed any legal limits. Your Plan document will also spell out whether or not first year participants receive allocations on their full year compensation or from date of entry only.

8 9. Form 5500-SF Information Note: The following questions are taken directly from the Form 5500-SF. All questions must be completed in order for us to properly prepare the Form 5500-SF for your Plan. If you have any questions about their interpretation, please call your RPC. If any of the answers to questions 1a to 3 are "Yes", then you must also include an amount. Y/N Amount 1. (Not on 5500-SF) Do you submit employee deferrals on a per payroll basis? XXXX 1a. Was there a failure to transmit to the Plan any participant contribution within the time period described in 29 CFR ? *See below for specifics. 2. Were there any non-exempt transactions with any party-in-interest? Includes the lending or use of Plan assets to a fiduciary for their personal interest. 3. Did the Plan have a loss, whether or not reimbursed by the Plan's fidelity bond, that was caused by fraud or dishonesty? *The DOL has strict regulations regarding the time frame in which elective deferral contributions and loan repayments must be transferred by an Employer to a qualified Plan. Both the IRS, upon Plan Audit, and DOL insist that deferrals and loan payments must be segregated from the general company assets as soon as administratively possible. The IRS and DOL normally consider this to be within three (3) to five (5) business days* of being withheld from employee paychecks. Deposits to the Plan must be made consistently and as early as possible each and every time that elective deferral contributions are withheld from paychecks. EXAMPLE: If participants are paid on a bi-weekly basis, 401(k) deferrals and loan payments should be processed on a bi-weekly basis. Monthly deposits are not acceptable and are not considered timely if your payroll cycle is more frequent than monthly. *Note that in January, 2010, the DOL issued final Regulations regarding the timing of deposits and have indicated that within 7 business days is generally acceptable for plans with less than 100 participants.

9 10. Plan Loans According to our records, your Plan offers loans to Plan participants: If so, did any Participant fail to make loan repayments for a period longer than 3 months? (Y/N) If so, please provide a list of those participants and their last payment date: Name Last Payment Date 11. Life Insurance According to our records, your Plan offers Life Insurance as a Plan investment: If yes, please complete the Life Insurance Addendum included in thesupplemental Informationnn Package. 12. Outside Assets According to our records, your Plan allows investments in individual accounts outside of your main investment provider: If yes, please provide a full year's statement for each account. Since additional reconciliation is required for this type of account, we require a detailed listing of all contributions made by participants during the Plan Year. Please indicate this either on the Census Request Spreadsheet or on a separate report of your design. By signing below, I hereby certify that the information contained herein is correct and complete. Signature Date Printed Name Title

10 Contribution Verification Detail Contribution informationn may be available to us from your record keeper (if applicable). If these totals can also be supplied separately from the record keeper's system, we will be in a position to perform additional quality assurance on this data. If this data is not supplied, we will assume all data from the record keeper is 100% complete and accurate. 1. List total contribution(s) funded during this year for the prior Plan year (if any): Example: 2011 Contribution deposited to the Plan in 2012 Deferrals (Pre-tax and/or Roth) Match Type Date Amount Basic (Profit Sharing, MP, QNEC, etc) Safe Harbor 2. List total contribution(s) made during this year for this Plan Year. Example, 2012 Contribution deposited to the Plan in 2012 Total Type Amount Deferrals (Pre-tax and/or Roth)* Match Basic (Profit Sharing, MP, QNEC, etc) Safe Harbor Rollover Total 3. List total contribution(s) made for this year after the Plan Year ended (accrual, receivables) (if any): Example: 2012 Contribution deposited to the Plan in 2013 Deferrals (Pre-tax and/or Roth) Match Type Date Amount Basic (Profit Sharing, MP, QNEC, etc) Safe Harbor *For calendar year plans, total deferrals from #2 and #3 should match W-2 totals. The check date determines which Plan Year the 401(k) deferrals will be associated with. Total