Department of Labor (DOL) regulations require your plan to file a Form 5500 within 7 months after your plan year-end date (longer if you file an extension).  The Form 5500 is posted to the DOL website and becomes public information.  The Form 5500 is not meant to inform the public of every detail of your plan, but does give sales people enough information to make certain assumptions that are not always accurate.  If you have concern about what sales people are saying, please contact your advisor and Paragon.  We have access to accurate information, because we received it directly from the providers and you, the Plan Sponsor.

Highly Compensated Employees are generally those employees who own more than 5% of the company, along with the spouse, parents, children, or grandparent of the owner(s).  It also includes employees who earned over the Highly Compensated Limit from the company in the preceding year.

Yes, if the plan document provides for an immediately vested safe harbor contribution of at least 3% to all eligible employees or a minimum matching contribution of $1.00 on all employee deferrals up to the first 3% of pay, then an additional $0.50 on the deferral on the next 2% of pay. Also, if the ADP testing method used is Prior Year, The Paragon Alliance Group would be able to assist you in projecting the amount of elective deferrals allowed for the Highly Compensated group of employees.

The Plan Administrator should keep all beneficiary, change of beneficiary and spousal waiver forms on file. In the event of a participant’s death, the Plan Administrator will be responsible for having the beneficiary information on file.

Once you’ve verified that all applicable sections have been correctly completed, notify your payroll department with a list of the employees who will need to have pre-tax deferrals or Roth deferrals deducted.  If your plan allows Roth deferrals, it is critical that you clearly distinguish the deferral type.  Please note that employees can elect both pre-tax and Roth deferrals. You will need to make a copy of the entire Participant Enrollment Form. Keep this copy for your records.  Now what do I do?  

• Generally the enrollment forms can be faxed or mailed to the record keeper, since they will need to enter certain census data and the investment elections selected onto their system.
• Some record keepers require that the enrollment information above is entered onto their website and they will not accept the form.
• Other record keepers require or offer a service where participants will enroll online.

Provide the employee with a Salary Reduction Election Form. Once the employee has completed and signed the form, you will need to notify your payroll department of the change. If your plan allows Roth deferrals, it is critical that you clearly distinguish the deferral type.  Please note that employees can elect both pre-tax and Roth deferrals.  Keep this form on file to maintain your records. Please consult your Plan Documents for provisions regarding salary deferral changes.

After processing internally, generally Enrollment forms, Participant Data Change forms, Investment Change forms and Rollover Contribution Election Forms should be sent directly to the record keeper. Please note that employees can often also make their investment changes using the provider website or Interactive Voice Response System.

Generally speaking and unless the record keeper will work directly with plan participants,  withdrawal forms should be forwarded directly to Paragon for completion and review; then they will be forwarded to the investment carrier. To ensure proper processing, please make sure you are using the most recent withdrawal forms located on the record keeper’s plan sponsor website.

It is the Plan Administrator’s responsibility to notify employees when they become eligible.  Many record keepers will offer enrollment solicitation services if you supply accurate and frequent detailed data files directly to them.  Please contact your financial advisor if you would like their support in enrolling employees. Paragon can also assist you in developing a process and system if handling internally is the most efficient method for your company.

This is an optional change. Benefits received by a non-spouse beneficiary from a qualified plan may now be directly rolled over to an IRA, which is treated as an inherited IRA.