@401kBasics Plan Sponsor Quick Tips: Fee Disclosure Resources

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Earlier this year the DOL published a rule that will provide employers that sponsor 401(k) plans with information about the costs associated with such plans. Service providers will be obligated to provide this information to plan fiduciaries. Below are a few resources surrounding the fee disclosure topic:

  • EBSA – DOL issues guidance on retirement plan fee disclosure rules.
  • Videos – Business & Legal Resources, BLR has put out 3 videos on their YouTube channel on what you need to know about the fee disclosure requirements.
  • Service providers – Many have launched web portals to help plan sponsors and participants understand their fees. Principal Financial Group has been on the forefront with this one.

The Internet has a wealth of information on the topic, available to you via a quick search. Service providers are currently working on furnishing their plans with fee information, hence when in doubt, please contact them.

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.


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@401kBasics Plan Sponsor Quick Tips: 10% Early Penalty Exception

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Did you know that not all distribution payments made to a qualified plan participant are subject to the 10% early withdrawal penalty? The exception is contingent on the participant separating from service with employer during or after the year they reach age 55.  A few examples include:

  • A distribution payment to a terminated participant at age 58 is exempt.
  • A distribution payment to a terminated participant in the year they turn age 55 is exempt.
  • A participant who terminates from service at age 51 but requests a distribution payment at age 55 is not exempt.

As you can see there are several scenarios that allow a terminated participant to take a distribution without the 10% penalty before the age of 59.5. You may contact your service provider for further information on this topic.

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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@401kBasics Plan Sponsor Quick Tips: Pre-approved Plan Obligations

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

If you have a pre-approved plan and adopted it as your employees’ retirement plan then you are obligated to keep the plan in compliance with all legal requirements. Below are tips to help you with this responsibility:

  •  Service Agreement – Make sure you understand the agreement as it show your responsibilities along with those of your pre-approved sponsor.
  •  Adoption Agreement – This agreement outlines your plan choices and you must operate your plan in accordance with its terms.
  • Communication – Pay close attention to all communications from your pre-approved plan sponsor and administrator.
  • Payroll – Your payroll department should be aware of your plan terms.
  • Plan review – It is recommended that you review your plan regularly to make sure that you are in compliance with the law and that it still right for your business.

There are many facets to employer obligations for pre-approved plans but the list above should give you a start. For more information please contact your service provider


This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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@401kBasics Plan Sponsor Quick Tips: Mark Important Dates!

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Plan sponsors have a fiduciary duty of monitoring plan activity for the benefit of plan participants. This can take shape in many forms, one of which is be aware of and acting prudently to the crucial dates of plan events. Automation is making it easy for plan sponsors to remember such events but it helps a fiduciary reduce liability by knowing when these dates occur. Below are some important dates that should not be ignored:

  • Plan Year End – This is the last day of a plan year and can be found in the adoption agreement form of any 401k plan.  Most plans have December 31t selected but chances are your plan could be off calendar as some plans correlate their fiscal year to the plan year. Not knowing this date is detrimental to the timely submission of your nondiscrimination testing, form 5500 filing, as well as numerous other events.
  • Return of Excess Contributions – Should your plan fail the ADP or ACP test, and need to refund contributions to the Highly Compensated Employees, this needs to be done within 2.5 months after the end of the plan year. (For a calendar year plan, this would fall on March 15th.) Failure to refund these contributions in a timely manner would result in a 10% excise tax to the plan sponsor.
  • Form 5500 Due Date – This form should be filed with the Department of Labor by the last day of the 7th calendar month after the end of the plan year. (9.5 months if a Form 5558 extension has been filed).
  • Notices to participants – A plan sponsor is required to notify plan participants of all plan provisions at certain times of the year. One of those notices pertains to Safe Harbor plans. Eligible employees are required to receive a written notice, no more than 90 days but not less than 30 days prior to the start of the plan year, describing the safe harbor options the employer will use for the plan year. The average employee should easily understand the notice.

A 401k Retirement plan has many dates that a fiduciary needs to be aware of in order to reduce liability. The best place start looking for these dates is through your retirement plan service provider!

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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@401kBasics Plan Sponsor Quick Tips: Test Results

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Nondiscrimination testing is performed on qualified plans to ensure that all participants benefit fairly. In this article we will explain the 402(g) limit, corrective measures and it’s deadlines:

  • The 402(g) limit is an annual limit that an individual can defer into the plan.
  • Roth and pre-tax contributions are used to determine if the limit has been reached.

The 402(g) limit excludes catch-up contributions. All excess deferrals should be refunded before April 15th of the year following the year in which the elective deferrals were made. Please consult your service provider for more information.

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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@401kBasics Plan Sponsor Quick Tips: Test Results

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Nondiscrimination testing is performed on qualified plans to ensure that all participants benefit fairly. In this article we will explain the coverage testing, corrective measures and it’s deadlines:

  • The test is required to prove that the plan meets certain coverage standards set under the IRC.
  • There are two minimum coverage tests (Ratio test and Average benefit test) under IRC section 410(b) and a plan must pass either test in every plan year.
  • If a plan fails then an additional employer contribution is required to satisfy this test.

Certain plans, such as those on a standardized adoption agreement are designed to automatically pass coverage testing. For more information on this topic make sure to contact your service provider.

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.


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@401kBasics Plan Sponsor Quick Tips: Test Results

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

Nondiscrimination testing is performed on qualified plans to ensure that all participants benefit fairly. In this article we will explain the annual additions limitation test (415), corrective measures and it’s deadlines:

  • Internal Revenue Code Section 415 limits the total contributions that a participant can be credited in a single year. These include Elective deferrals, Roth contributions, Employer Match, Profit Sharing.
  • The test excludes loan payments, rollovers, and catch-up contributions (If your document has provisions for them).

The limit for 2012 is $50,000 or $55,500 if the participant is eligible for catch-up contributions and may compromise your plan qualification status if exceeded. Hence it’s always a great idea to check with your plan sponsor!

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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