FAQ for Employers

What Does TPA mean?

Third Party Administrator. The TPA is responsible to maintain plan document compliance, perform annual non-discrimination testing, perform calculations and prepare governmental forms.

What are the advantages of having a qualified retirement plan?

  • 100% tax deductible for Employer/Company Contributions
  • Favorable Plan Design for Selected Employees
  • Federal Tax Credit of $500 for three years
  • Under certain conditions participant account balances are not subject to the claims of creditors under federal bankruptcy proceedings
  • Numerous investment options
  • Employees may contribute on a pre-tax basis or after-tax (Roth) basis
  • 100% tax deductible administrative costs to maintain the qualified retirement plan

What is a Defined Benefit Plan?

The Internal Revenue Code refers to a defined benefit plan as “other than an individual account plan” as opposed to a defined contribution plan which is an individual account plan. The Code also specifies the defined benefit must be definitely determinable. A defined benefit plan states a pre-determined benefit in advance.

What are the features of a Defined Benefit Plan?

  • Characteristics of a Defined Benefit Plan are:
  • Employer contributions are mandatory each plan year
  • Employer contributions are due within 8 1/2 months after the end of each plan year
  • Employer is subject to an excise tax of 10% of the amount due payable to the IRS for nonpayment
  • The penalty is increased to 100% of the amount due if NOT corrected
  • Employer contributions are actuarially calculated by an Enrolled Actuary using IRS approved methods
  • In most instances the employer is subject to PBGC fixed and variable premium depending upon the funded status of the Plan
  • Employer contributions are based upon the plan investment experience, age of the employee, compensation, length of service past and future

What is a Safe Harbor Plan?

A Safe Harbor plan is a plan which attempts to avoid the problems of the ADP and Top Heavy tests by making a guaranteed contribution to employees. That contribution is either a matching contribution that caps at 4% of wages for employees who are contributing their own funds, or a contribution of 3% of wages for all eligible employees.

FAQ For Plan Participants

What investments are available in our retirement plan and how do I find them?

A complete listing of available investments can be found by logging into your account. You can also consult with the plan’s financial advisor for more information about investing in those available funds.

Can I take a loan from my 401(k)?

Some plans allow loans. Your plan’s SPD (Summary Plan Description) will tell you if loans are allowed. Plans that allow loans generally require a vested balance of $2,000 to qualify for the minimum loan amount of $1,000. The maximum you may borrow is 50% of your vested account balance with a maximum of $50,000.

Do I qualify for a hardship distribution from my account?

The IRS definition of a hardship is to 1) prevent eviction/foreclosure, 2) purchase primary residence, 3) pay outstanding medical bills for you or your dependent, 4) pay outstanding post-secondary education expenses for you or your dependent, 5) pay funeral expenses, 6) pay expenses due to catastrophic loss of a home.

How long does it take to get my money if I take a distribution or loan?

Generally, it takes around 2 weeks for the entire process. However incomplete forms or other information needed from you or your employer may slow down the process.

Who do I talk to if I have questions?

You should speak to your employer with any questions regarding the plan.

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