The following are intended to provide answers to frequently asked questions. If your question is specific to your plan, please contact your plan administrator for assistance. If you have any additional questions, feel free to contact us at RSInfo@firstambank.com.
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What are the current year's contribution and compensation limits?
When must an employer deposit 401(k) elective contributions withheld from employees' payroll checks?
The Department of Labor (DOL) requires that 401(k) contributions and loan repayments deducted from participant’s pay should be deposited into participant accounts as soon as possible after the payroll date of withholding. For Plans with fewer than 100 participants, the DOL guideline requires deposits to be made no later than seven business days after the payroll date of the withholding. For Plans with more than 100 participants, the DOL will require that the deposits are made as soon as possible. As an example, if the company has shown that it can deposit 401(k) contributions within 3 business days, the DOL will expect all deposits to be made in that timeframe.
Can an employee rollover benefits into a plan before meeting the plan's eligibility requirements?
If a plan accepts rollover distributions from other qualified plans, it may also allow for employees to make a rollover contribution before they meet the plan's minimum age and service eligibility requirements. These employees would be considered "limited participants" in the plan.
Can 401(k) deferrals be made from severance pay?
No, 401(k) deferrals may only be made from pay while the participant is an employee of the plan sponsor. Severance pay that is received after termination of employment is not eligible for deferral.
Do taxes need to be withheld from a hardship distribution prior to paying a participant?
Not necessarily. Since a hardship distribution is not eligible to be rolled over to an IRA or other qualified plan, participants may elect to have no withholding on their hardship withdrawal. The withdrawal is reported on a Form 1099-R as taxable income. If no withholding is elected, the participant may be required to make estimated tax payments and should consult a tax professional before making this decision. Absent the written election not to withhold taxes, 10% withholding is required.
Who is the "plan administrator?"
The plan administrator is the individual or entity designated in the plan document as such, and is responsible for interpreting the plan and adhering to its terms. The plan administrator is often the employer sponsoring the plan or the trustees of the plan. We are not the plan administrator. Rather, we are an administrative service provider engaged to assist the plan administrator in fulfilling its responsibilities. We are sometimes called a third party administrator (TPA).
What is a Summary Plan Description?
A Summary Plan Description (SPD) is a booklet for plan participants that describes the plan provisions in a manner that can be understood by the average individual.
When must the Summary Plan Description be distributed?
It must be distributed within 90 days of the date an individual becomes a plan participant.
What is a Summary Annual Report?
A Summary Annual Report (SAR) is a narrative which contains basic plan and financial data for the plan as a whole. A participant must receive a SAR for each plan year.
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