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Questions & Answers
   
   
  What are the contribution limits?
 
Pension Limits      
 
2017
2018
 
Elective Deferral
18,000.00
18,500.00
 
Catch Up 
(for participants age 50 & above)
6,000.00
6,000.00
 
Social Security Wage Base
127,200.00
128,700.00
 
Annual Compensation to be considered a
Highly Compensated Employee
120,000.00
120,000.00
 

  What are the bonding requirements?
What are non-qualified plan assets?
What are "qualifying plan assets?"
Are there any exceptions to the bonding requirement?
How do I obtain a fidelity bond?
Who is the Plan Administrator?
Is my plan required to have an audit performed by an
  independent CPA?
Is my plan considered to be a large plan filer?
Is my plan considered to be a small plan filer?
What if I sponsor more than one plan?
Who is considered to be a participant?
Is an employee still considered to be a participant even if they elect
  not to defer?
What is the small plan audit wavier requirement?
What if an employee becomes eligible to
  participate during the year?
How soon do I need to remit the participant
  contributions to the Plan?
What records must be kept and provided to the
  Third Party Administrator (TPA) on an annual basis?
What is the form 5500?
What is the annual filing requirement?
What if a participant terminates employment?
Who do participants contact if their account balance
  was automatically rolled over?
What if a participant requests a withdrawal on account
  of a financial hardship?
What if a participant requests a loan from the Plan?


What are the bonding requirements?
A bond must be obtained for plan fiduciaries. A Plan Fiduciary is any person or entity who handles or has access to the Plan's assets, including, but not limited to, the Plan Administrator, Trustee, and Employer. The amount of the bond is fixed at the beginning of each plan year. The minimum bond required is 10% of the amount of funds being handled. The bond may not be less than $1,000 (even if the amount of funds being handled would permit a smaller dollar amount) and need not be greater than $500,000 (even if 10% of the amount of funds being handled would otherwise require a larger dollar amount).

Form 5500 requires that the amount of the bond and the name of the surety company issuing the bond must be shown.

An exception to the maximum amount of $500,000 is applicable if more than 5% or the plan's assets are non-qualified plan assets

What are non-qualified plan assets?
Any assets not meeting the definition of qualified plan assets (see below)

What are "qualifying plan assets?"
  • Any assets held by any of the following regulated financial institutions
    • Bank or similar financial institution
    • Insurance company qualified to do business under the laws of a state
    • Organization registered as a broker-dealer under the Securities Exchange Act of 1934
    • Any other organization authorized to act as a trustee for individual retirement accounts under Code section 408
  • Shares issued by an investment company registered under the Investment Company Act of 1940 (e.g., mutual funds)
  • Investment and annuity contracts issued by any insurance company qualified to do business under the laws of a state
  • In the case of an individual account plan, any assets in the individual account of a participant or beneficiary over which the participant or beneficiary has the opportunity to exercise control and with respect to which the participant or beneficiary is furnished, at least annually, a statement from a regulated financial institution referred to above describing the assets held or issued by the institution and the amount of such assets
  • Qualifying employer securities
  • Participant loans meeting the requirements of ERISA

Are there any exceptions to the bonding requirement?
Yes, if a business (partnership or corporation) is wholly owned by an individual or by an individual and their spouse and if there are no employee participants, other than the individual and their spouse, bonding is not required.

How do I obtain a fidelity bond?
You can contact your casualty agent and ask them to get an ERISA Fidelity Bond for your Plan. You'll need to provide the agent the names of the people to be bonded and for what amounts.

The bond must reimburse the plan from the first dollar of loss up to the full amount for which the person causing the loss is bonded. The bond must provide a period of no less than one year after termination or cancellation in which to discover a plan loss. It may be a blanket, schedule, or individual bond.

Who is the Plan Administrator?
The Plan Administrator is defined as a person with responsibility for the ultimate control, disposition or management of the money received or contributed to the plan.

Is my plan required to have an audit performed by an independent CPA?
Large plans (generally more than 100 participants) are required to have an annual audit performed by an independent CPA. Small plans (generally less than 100 participants) are not required to have an audit if they meet the Small Plan Audit Wavier Requirements below.

Is my plan considered to be a large plan filer?
As a general rule, a large plan filer is a plan which covers 100 or more participants at the beginning of the plan year. If a plan that has been filing the forms required for a large plan filer has its participant level drop below 100 but not below 80, it may continue to treat itself as a large plan filer. This means continuing to file the schedules that apply to a large filer, including the annual audit requirement. A plan is not required to use this exception and may instead follow the rules for a small plan filer, which may make the annual report less costly to prepare. In particular, an employer might choose to use this exception so that a financial audit will not have to be conducted on the plan starting with the first year that the participant count drops below 100.

Is my plan considered to be a small plan filer?
As a general rule, a small plan filer is a plan which covers fewer than 100 participants at the beginning of the plan year. If a plan that has been filing the forms required for a small plan filer has its participant level rise above 99 but not above 120, it may continue to treat itself as a small plan filer. This means continuing to file the schedules that apply to a small filer. A plan is not required to use this exception and may instead follow the rules for a large plan filer. A plan eligible for this exception usually takes advantage of it because it means a less costly filing. As long as the participant count does not rise above 120, there is no limit on the number of years an employer may use this exception, provided that the small plan filer rules were applied in the year before. If, for any year that the participant count is above 99 but not above 120, the employer elects to be treated as a large plan filer, then it must file as a large plan filer for all subsequent years unless the participant count drops below 100.

This exception is not applicable to a new plan which starts with a participant count above 99. A plan must have at least one year with a participant count below 100, in which it is eligible to file as a small plan filer, before it can use this exception when the participant count rises above 99.

What if I sponsor more than one plan?
If an employer sponsors more than one plan, each plan determines its filing status separately, based on the participant count in that plan. The fact that plans may be permissively aggregated together for coverage testing does not affect their filing status for 5500 purposes.

Who is considered to be a participant?
Generally, an employee is a participant in an employee benefit plan as of the beginning of the plan year if they have satisfied the plan's eligibility requirements and the entry date occurred on or before the first day of the plan year. Even if an employee's active participation ceases, they retain their status as a participant until the benefits due from the plan are paid in full. If a terminated participant has no vested rights in his or her benefit, participant status will cease after the participant incurs a one-year break in service.

A common error is to fail to include employees who qualify as participants for the first time on the first day of the plan year. The first day of the plan year is an entry date for most plans. Using the participant count on the last day of the prior plan year will fail to include these employees in the participant count.

Is an employee still considered to be a participant even if they elect not to defer?
An employee is a participant in a 401k plan if they have the right to defer compensation under the plan, regardless of whether they actually make a deferral election. Therefore, these employees should be considered in the participant count when determining whether the plan is a large plan or a small plan.

What is the small plan audit wavier requirement?
  • At least 95% of plan assets are "qualifying plan assets" OR any person who handles assets of the plan that don't constitute qualifying plan assets are bonded in accordance with the requirements of ERISA section 412 (see above bonding requirements), except that the amount of the bond shall not be less than the value of such non-qualifying assets.
  • The Administrator must include the following in the Summary Annual Report
    • Name of each regulated financial institution holding or issuing qualifying plan assets and the amount of such assets reported by the institution as of the end of the plan year (this SAR disclosure doesn't apply to qualifying employer securities, participant loans and individual account assets)
    • Name of the surety company issuing the fidelity bond, if the plan has more than 5% of its assets in non-qualifying plan assets
    • A notice that participants and beneficiaries may, upon request and without charge, examine or receive from the plan evidence of the required bond and copies of statements from the regulated financial institutions describing the qualifying plan assets
    • A notice that participants and beneficiaries should contact the EBSA Regional Office if they are unable to examine or obtain copies of the regulated financial institution statements or evidence of the required bond, if applicable
  • In response to a request from any participant or beneficiary, the administrator, without charge to the participant or beneficiary, must make available for examination, or upon request furnish copies of each regulated financial institution statement and evidence of any required bond.

What if an employee becomes eligible to participate during the year?
  • Inform the employee that they are now eligible to participate in the Plan
  • Have the employee complete a 401K Election Form
    (www.benxco.com/employers/pension plans/forms)
  • Have the employee complete a Beneficiary Designation Form
    (www.benxco.com/employers/pension plans/forms)
  • Contact the investment advisor for any additional forms that are required for the employee to enroll and make investment choices under the plan
  • Provide a copy of the Summary Plan Description (SPD) within 90 days of the date they become a participant under the Plan
  • Maintain copies of Beneficiary Designation Forms and 401K Election forms

How soon do I need to remit the participant contributions to the Plan?
The Department of Labor (DOL) has proposed a safe harbor deadline for an employer to deposit participant contributions withheld from his/her compensation. Although this is currently a proposed regulation, an employer may rely on this rule now. The DOL will consider contributions deposited with the plan no later than the 7th business day following the date of the withholding to be in compliance with the general rule. A plan that fails to comply with the safe harbor does not automatically violate the plan asset regulations. However, the employer would have the burden of demonstrating that it deposited the participant contributions as soon as reasonably possible and no later than the maximum deadline (the earlier of the 15th business day of the month following the month in which the contributions were withheld or as soon as they can be segregated from the assets of the employer). Employers should note that when the proposed regulations are finalized, the DOL will likely challenge the deposit of any payments beyond the 7-day safe harbor rule.

What records must be kept and provided to the Third Party Administrator (TPA) on an annual basis?
  • A list of ALL employees and participants employed during the year
  • Date of Birth
  • Date of Hire
  • Marital Status
  • Hours worked by each employee and participant
  • Each employee and participant's compensation
  • Dates of termination
  • Records of the Plan's investment activities
All of this information can be submitted through our secure plan sponsor website at www.benxco.com/employers/pension plans/account information. Please contact us for your account login information.

What is the form 5500?
Form 5500 serves as the plan's annual return to provide the government with statistical information about the plan and the plan sponsor, to report financial information about the plan, and to demonstrate compliance with various legal requirements.

What is the annual filing requirement?
  • Each year the Plan Administrator is required to file Form 5500 with the DOL. This form is generally due 7 months after the close of the plan year (July 31st for calendar year plans). The form can be extended for an additional 2 1/2 months (October 15th for calendar year plans)
  • The Summary Annual Report (SAR) must be furnished to each Participant on an annual basis
    • The SAR is a general explanation of the information contained in Form 5500 and must contain the following information
      • The value of the Trust assets as of the first and last day of the Plan Year
      • Plan expenses incurred during the Plan Year
      • Insurance information, if the Plan has any investment in insurance contracts
      • The SAR must also state that the Participant has the right to examine, at any time during reasonable hours, the Plan's annual report (Form 5500), the accountant's report (generally for Plans with at least 100 Participants), and, if applicable, a list of any Plan transactions involving at least 5% of Plan assets or involving "Interested Parties"
      • The SAR must be furnished to participants and beneficiaries within 9 months after the plan year end (September 30 for a calendar year plan)

What if a participant terminates employment?
Upon termination of employment a participant can request a distribution from the Plan. The forms are available at www.benxco.com/employers/pension plans/forms

These forms should be completed and then forwarded to Ben-X, LLC. Please keep a copy for you records.
If a participants vested balance is greater than $5,000 and they do not elect a cash distribution or rollover, their benefit will remain invested under the Plan.

If a participant's vested balance is $5,000 or less and they do not elect to receive a cash distribution or rollover, their benefit will be automatically rolled over into an IRA. Upon rollover to the IRA, their benefit will be invested in investment vehicles designed to preserve principal, such as a Money Market, Certificate of Deposit, or Stable Value Fund. Participants may modify the investment choices under the IRA or transfer their benefit from the IRA at any time by contacting the IRA provider.

Who do participants contact if their account balance was automatically rolled over?
PenChecks Inc
8580 La Mesa Boulevard, Ste 100
La Mesa, CA 91941
800-541-3938

What if a participant requests a withdrawal on account of a financial hardship?
Plans may allow for hardship distributions. Taking a hardship distribution will reduce the value of the benefits the participant will receive at retirement. The following requirements will apply:
  • Certain contributions, such as earnings on salary deferrals and contributions, as well as earnings from employer safe harbor contributions are not eligible for withdrawal on event of a hardship. Other contributions may also be limited by your Plan.
  • A participant may only withdraw the amount needed to meet their financial emergency
  • A participant must exhaust all other sources of funds, including Plan loans, before receiving a hardship distribution
  • The Trustees are obligated to ask personal questions in order to determine eligibility
  • Salary deferrals to any 401(k) account must be suspended for at least six (6) months
  • Be advised of the tax implications, such as the 10% early withdrawal penalty, state and federal taxes. Please consult with appropriate tax advisors

To receive a distribution on account of hardship, participants must provide the Plan Administrator with sufficient documentation to demonstrate one of the following hardship events:
  • Unpaid medical expenses for participant, spouse or dependent
  • Payment of tuition and related fees for participant or a qualified dependent
  • Purchase of principal residence for participant (does not include mortgage payments)
  • To prevent eviction or foreclosure on participant's mortgage related to their principal residence
  • Payment for funeral or burial expenses for participant's deceased parent, spouse, child or dependent
  • Payments of expenses to repair damages due to a natural disaster

If a participant needs to request a hardship distribution, the application is available at www.benxco.com/participants /pension plans/forms

These forms should be completed and then forwarded to Ben-X, LLC. Please keep a copy for you records.

What if a participant requests a loan from the Plan?
Plans may or may not allow for loans. Plans may provide different limits and rules.
  • A Participant may borrow up to 1/2 of their vested interest up to $50,000 (whichever is less)
  • A Participant may have one (1) loan outstanding at any time
  • You will be charged a reasonable rate of interest
  • Repayments are automatically deducted from you paycheck

If a participant requests a loan, the application is available at www.benxco.com/participants/pension plans/forms

These forms should be completed and then forwarded to Ben-X, LLC. Please keep a copy for you records.