responsibilities

Responsibilities Of SPONSOR

SPONSOR AND/OR TRUSTEE RESPONSIBILITIES

SPONSOR and/or TRUSTEE shall provide TPA with certain information that includes but is not limited to tax records, social security numbers, addresses, dates of birth, dates of hire, financial statements, balance sheets, schedule of receipts and disbursements, plan expenses, account balance information, beneficiary information, and bank account information (herein referred to as PERSONAL IDENTIFIABLE INFORMATION or PII). SPONSOR and/or TRUSTEE shall be responsible for ensuring that the PII provided to TPA is accurate and complete.   SPONSOR and/or TRUSTEE agree and understand that the PII necessary to calculate required contributions must be submitted to TPA at least thirty (30) days prior to the contribution due date through TPAs website. SPONSOR and/or TRUSTEE agree not to email any PII to TPA as emailing PII is not secure and may increase the chances of identity theft.  Any PII necessary to calculate the required contributions that is received with less than thirty (30) days before the contribution due date, may not be processed by TPA and TPA may not be able to calculate the PLAN’s required contribution.   TPA will rely exclusively on the PII provided by SPONSOR, TRUSTEE and/or PLANs advisors, whether oral or in writing, and TPA will have no responsibility to independently verify the accuracy of the PII. SPONSOR and/or TRUSTEE acknowledges that inaccurate, incomplete, missing, and/or late PII could result in fines or penalties to SPONSOR and possibly disqualification of PLAN. TPA assumes no responsibility for, and shall not have any liability for, any consequences that result from TPA’s inability to complete its work in the ordinary course of its business due to the failure of SPONSOR and/or TRUSTEE for submitting to TPA inaccurate, incomplete, missing, and/or late PII. SPONSOR and/or TRUSTEE agrees to send all PII through TPA’s website. The definition of PII shall not include the Form 5500.

SPONSOR and/or TRUSTEE agree and understand that if PLAN is a Defined Benefit Plan, the PII necessary to calculate required contributions must be submitted to TPA at least forty-five (45) days prior to the contribution due date through TPAs website.  

SPONSOR and/or TRUSTEE shall be solely responsible for remitting all contributions to PLAN, whether by check or via an ACH transaction, wire, or other form of electronic transfer.  SPONSOR and/or TRUSTEE shall be solely responsible for making sure that all employee deferrals and/or employer contributions have cleared SPONSOR’s bank account.   Even though TPA may assist SPONSOR and/or TRUSTEE from time to time in remitting contributions to PLAN via regular U.S. mail, an ACH transaction, wire, or other form of electronic transfer, TPA shall not be responsible for making sure that the contributions have cleared SPONSOR’s bank account.

SPONSOR and/or TRUSTEE shall be solely responsible for making sure that SPONSOR’s bank account has sufficient funds to cover all employee deferrals and/or employer contributions.    TPA assumes no responsibility for, and shall not have any liability for, any consequences that arise from the SPONSOR’s bank account having insufficient funds to cover the employee deferrals and/or employer contributions.

SPONSOR and/or TRUSTEE understand that all employer contributions must be made to the PLAN not later than eight and one-half (8.5) months following the close of the Plan Year or by September 15th for a calendar year plan, or at the time of the filing of the corporate return.   Employee deferrals are required to be made to the PLAN no later than seven (7) days after payroll.  Any contributions received after the seventh day, may be considered late by the Department of Labor and subject to fines and or penalties.  TPA assumes no responsibility for, and shall not have any liability for, any consequences that arises from any employee or employer contribution that is deemed to be late by the IRS or Department of Labor.  Even though TPA may assist SPONSOR and/or TRUSTEE from time to time in remitting contributions to PLAN via regular U.S. mail, an ACH transaction, wire, or other form of electronic transfer, TPA shall not be responsible for making sure that the contributions have been timely remitted.

SPONSOR and/or TRUSTEE shall be responsible for the timely filing of all governmental forms that TPA prepares. SPONSOR and/or TRUSTEE acknowledges that failure to timely file required governmental forms, including, but not limited to, Form 5500, PBGC Form 501, PBGC Form 500, and IRS Form 5330 may result in fines and/or penalties which shall be the sole responsibility of SPONSOR and/or TRUSTEE. TPA assumes no responsibility for, and shall not have any liability for, any consequences that arise from SPONSOR and/or TRUSTEE’s failure to timely file required governmental forms prepared by TPA. SPONSOR and/or TRUSTEE understand that the filing due date of the Form 5500 and attachments with the Department of Labor is seven (7) months following the close of the Plan Year or July 31st for a calendar year plan.  The Form 5500 with extension is due nine and one-half (9.5) months following the close of the Plan Year or October 15th, for a calendar year plan. 

SPONSOR and/or TRUSTEE agree and understand the PII necessary to prepare the Form 5500 must be submitted to TPA at least fifteen (15) days prior to the due date of the Form 5500, with a timely filed extension Form 5558.  Any PII that is required by TPA, in order to prepare the Form 5500, that is received with less than fifteen (15) days of the due date of the Form 5500, with a timely filed extension Form 5558, may not be prepared by TPA in order for the SPONSOR and/or TRUSTEE to timely file the Form 5500.   TPA will rely exclusively on the PII provided by SPONSOR and/or TRUSTEE or SPONSOR and/or TRUSTEE’s advisors, whether oral or in writing, and will have no responsibility to independently verify the accuracy of the PII. SPONSOR and/or TRUSTEE acknowledges that inaccurate, incomplete, missing, and/or late PII could result in fines and penalties. TPA assumes no responsibility for, and shall not have any liability for, any consequences that result from TPA’s inability to prepare the Form 5500 by the due date, due to the SPONSOR and/or TRUSTEE’s failure to timely submit to TPA accurate and/or complete PII.

SPONSOR and/or TRUSTEE agree and understand that if PLAN is a Defined Benefit Plan, the PII necessary to prepare the Form 5500 must be submitted to TPA at least forty-five (45) days prior to the due date of the Form 5500, with a timely filed extension Form 5558. Any PII that is required by TPA, in order to prepare the Form 5500, that is received with less than forty-five (45)  days of the due date of the Form 5500, with a timely filed extension Form 5558, may not be prepared by TPA in order for the SPONSOR and/or TRUSTEE to timely file the Form 5500.  

SPONSOR and/or TRUSTEE shall be responsible for communicating any and all information to participants of PLAN and/or employees of SPONSOR, including but not limited to modifications notices, elections, amendments and any other notices or reports required by law.

SPONSOR and/or TRUSTEE acknowledges that TPA will not prepare Form 1099-R, Form 945, and/or remit withholding taxes to the IRS, unless SPONSOR has requested it in writing.  SPONSOR will prepare Form 945, and remit all withholding taxes to the IRS.  If TPA prepares Form 1099-R, a separate fee will be billed to SPONSOR.  Any fee for the preparation of Form 1099-R is separate and in addition to the fees charged under Section G of this TPA AGREEMENT.

SPONSOR and/or TRUSTEE understands that PLAN’s operation and tax qualification is affected by other retirement plans sponsored by SPONSOR and/or TRUSTEE (whether currently active, terminated and/or whether retirement plan is a client of TPA) and other entities owned partially or entirely by, or related to, SPONSOR and/or TRUSTEE. SPONSOR and/or TRUSTEE is responsible for informing TPA of the existence of other retirement plans that SPONSOR maintains, the existence of other entities owned or partially owned by SPONSOR and/or TRUSTEE, and the existence of a retirement plan at another entity owned or partially owned by SPONSOR and/or TRUSTEE. SPONSOR and/or TRUSTEE are responsible for notifying TPA when there is a change in this information or in the tax filing status of SPONSOR and/or TRUSTEE (e.g., a change from S corporation to C corporation status, a change to an LLC, SPONSOR merges with another entity, and/or TRUSTEE(s) purchases or opens another business, etc.).

SPONSOR and/or TRUSTEE is responsible for all discretionary decisions relating to the PLAN, including the interpretation of plan document provisions, the determination of eligible employees, proper vesting of accounts, the evaluation of claims made by participants for plan benefits, the investment of plan assets, distribution of plan benefits and the payment of plan service providers. To assist SPONSOR and/or TRUSTEE, TPA may, when requested, provide advice to SPONSOR and/or TRUSTEE about such matters (but not about investments).

The PLAN must obtain a Fidelity bond.  TRUSTEE and any persons who “handle” the PLAN’s assets or other property must be bonded.  “Handling” involves significant risk of loss through fraud or dishonesty and is not limited to physical contact with the funds.  A fidelity bond must be obtained at the start of each reporting year from an acceptable surety company in the amount of at least ten percent (10%) of the amount of PLAN’s assets handled in the previous reporting year ($1,000 minimum and no deductible).  It must provide for a discovery period of one (1) year and must meet the other requirements of the law.  A blanket bond, either multiple-penalty or aggregate penalty, is acceptable. SPONSOR and/or TRUSTEE understand that a Fidelity Bond must be purchased for at least ten percent (10%) of the assets and that the bond must remain in-force while the PLAN is active.  TRUSTEE is responsible for making sure that TPA has the most recent copy of the Fidelity Bond’s declaration page.  In addition, if more than five percent (5%) of the plan assets are not qualifying assets as defined in Department of Labor (“DOL”) Regulations, the PLAN will be required to be audited or to obtain an additional fiduciary bond in an amount equal to one hundred percent (100%) of the Plan’s non-qualified assets. SPONSOR and/or TRUSTEE shall be responsible for locating and retaining the auditor and/or obtaining the bond.

SPONSOR understands that all 401(k) plans must pass the ADP/ACP test.  The ADP test is designed to limit the extent to which elective deferrals made on behalf of highly compensated employees may exceed those made on behalf of non-highly compensated employees. If the highly paid employees participate in the 401(k) to a greater degree than the non-highly compensated employees, then the above referenced plan may fail the ADP/ACP test.  If PLAN fails the ADP or ACP test, then employee contributions would have to be returned to the highly compensated employees or additional employer contributions may have to be made to keep PLAN in compliance.  If PLAN fails the ADP or ACP Test, it is the responsibility of SPONSOR to implement administrative procedures under Revenue Notice 2008-50 to prevent PLAN from failing in future years.  If the PLAN is a Safe Harbor 401(K), the PLAN is exempt from the ADP /ACP Test. However, should SPONSOR or TRUSTEE terminate the Safe Harbor Provision, PLAN must pass the ADP and ACP test for the year in which Safe Harbor Provision is terminated.

PLAN must also pass the Top Heavy Test. PLAN is considered top heavy when the highly compensated employees, as defined by the IRS, has an account balance which is greater than sixty percent (60%) of the total assets in PLAN.  If the PLAN should fail the Top Heavy Test, then a three percent (3%) of salary contribution must be made to PLAN.  If the PLAN is a Safe Harbor 401(K) Plan without a Profit Sharing Contribution, the PLAN is deemed to satisfy the Top Heavy Test.  However, should SPONSOR and/or TRUSTEE terminate the Safe Harbor Provision and the PLAN fails the Top Heavy Test or if PLAN has or adds a profit sharing contribution to PLAN, additional contributions may have to be made to PLAN on behalf of all employees to satisfy the top heavy test.

SPONSOR and/or TRUSTEE shall be responsible for making sure that all loans under the PLAN are paid in a timely fashion. Even though TPA may assist SPONSOR and/or TRUSTEE from time to time in processing loan requests, TPA shall have no responsibility whatsoever in making sure that loan repayments are made in a timely fashion. If any loans are not repaid in a timely fashion, SPONSOR and/or TRUSTEE shall be solely responsible for notifying the RECORDKEEPER, payroll provider, and/or other financial institution to classify the loan as being in default and issue the appropriate tax forms.

SPONSOR and/or TRUSTEE shall be responsible for notifying the RECORDKEEPER, payroll provider, and/or other financial institution directly when an employee’s status changes (i.e. from active to terminated). SPONSOR and/or TRUSTEE understand that the TPA is not responsible for contacting and/or notifying the RECORDKEEPER, payroll provider, and/or other financial institution as to the status change of an employee. 

SPONSOR and/or TRUSTEE agree and understand that TPA is not required and/or obligated to remind SPONSOR and/or TRUSTEE to submit any and all PII to TPA. Even though TPA may send reminder emails, reminder letters, and/or make calls to SPONSOR, TRUSTEE, and/or PLAN  from time to time, TPA shall not be responsible for any fines and/or penalties, due to the SPONSOR and/or TRUSTEE’s failure to timely submit to TPA accurate and/or complete PII.

SPONSOR and/or TRUSTEE shall be responsible for the timely filing of all governmental forms that TPA prepares. SPONSOR and/or TRUSTEE acknowledges that failure to timely pay any premiums due to the Pension Benefit Guaranty Corporation( hereafter referred to as “PBGC”) and/or timely file required governmental forms, including, but not limited to, Form 5500, PBGC Form 501, PBGC Form 500, IRS Form 5330, and any forms required under the PBGC’s My Plan Administration Account website(herein referred to as “My PAA”), may result in fines and/or penalties which shall be the sole responsibility of SPONSOR and/or TRUSTEE. TPA assumes no responsibility for, and shall not have any liability for, any consequences that arise from SPONSOR and/or TRUSTEE’s failure to timely file required governmental forms prepared by TPA. SPONSOR and/or TRUSTEE understand that the filing due date of the Form 5500 and attachments with the Department of Labor is seven (7) months following the close of the Plan Year (July 31st for a calendar year plan).  The Form 5500 with extension is due nine and one-half (9.5) months following the close of the Plan Year (October 15th for a calendar year plan.) 

SPONSOR and/or TRUSTEE agree and understand that if PLAN is a Defined Benefit Plan, the following restrictions may apply:

Restrictions on Distributions—If the plan’s funded ratio is less than 60%, distributions to a participant are limited. Notably, a participant cannot receive a lump-sum distribution of the full value of the accrued benefit.

Restrictions on Plan Amendments Improving Benefits—A plan may not be amended to increase benefits if its funded ratio would be less than 80% after the plan amendment, unless the employer immediately contributes the full value of the amendment to the pension fund.

Under Funding –The PPA will ultimately require plans to make contributions necessary to amortize unfunded benefit liabilities over seven years. The new rules will force sponsors of underfunded plans to contribute substantially more than under existing law. In addition, the manner in which the PPA determines contribution requirements could lead to significant volatility from year to year in required contributions, especially for underfunded plans. Even plans that are fully funded one year may become underfunded the next, depending on changes in interest rates.

Timing of Contributions If PLAN has a funding shortfall for the preceding year, the employer is required to make up the funding shortfall.  This may be done in one lump sum, quarterly contributions, or through a series of equal payments. There are sanctions for late or missed contributions including interest penalties, notification of participants and, possibly, liens in favor of the plan, enforceable by the PBGC.

SPONSOR and/or TRUSTEE acknowledges that SPONSOR and/or TRUSTEE are responsible for withdrawing any required minimum distributions (RMD) per IRC Section 1.408-8 and any amendments made thereto. Even though TPA may assist SPONSOR and/or TRUSTEE from time to time in calculating the RMD from PLAN or reminding the SPONSOR and/or TRUSTEE to take the RMD, TPA shall not be responsible for making sure that the RMD have been timely withdrawn.

SPONSOR and/or TRUSTEE may be notified by TPA that PLAN is not in compliance with certain sections of the Internal Revenue Code, and other regulations imposed by the Internal Revenue Service, the Department of Labor and/or The Pension Benefit Guaranty Corporation. If SPONSOR and/or  TRUSTEE are notified that PLAN is not in compliance, SPONSOR and/or  TRUSTEE agree to take the necessary steps to bring PLAN back into compliance. SPONSOR and TRUSTEE shall indemnify and hold harmless TPA, its partners, their affiliated companies, and all of their respective directors, officers, shareholders agents and employees, from any penalty, fine, and/or tax that might be imposed by the Internal Revenue Service and/or The Department of Labor, or any other governmental agency, arising from PLAN’s non-compliance; as well as any liability and/or expense as a result of the disqualification of the PLAN by the Internal Revenue. Failure of SPONSOR and/or TRUSTEE to take the necessary steps to bring PLAN back into compliance, may result in fines, penalties, and disqualification of plan.

SPONSOR and/or TRUSTEE agree and understand that TPA is not required and/or obligated to remind SPONSOR and/or TRUSTEE to submit any and all PII to TPA. Even though TPA may send reminder emails, reminder letters, and/or make calls to SPONSOR, TRUSTEE, and/or PLAN from time to time, TPA shall not be responsible for any fines and/or penalties, due to the SPONSOR and/or TRUSTEE’s failure to timely submit to TPA accurate and/or complete PII.SPONSOR and/or TRUSTEE agree and understand that TPA is not required and/or obligated to remind SPONSOR and/or TRUSTEE to deposit contributions to the plan in a timely manner.

 

© [thrv_dynamic_data_date id=’Y’ inline=’1′] The Pension department, Inc.

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