A TPA or Third Party Administrator is an outside organization that helps you as the plan sponsor manage the day to day aspects of running your employee retirement plan. The TPA works with you to ensure the ongoing accuracy of the plan, minimize the time the you have to spend on plan oversight, ensure you meet compliance deadlines, and coordinate with all parties. TPAs assure the accuracy and compliance of plan and participant records including: Eligibility Employer Calculations Loans, QDROs and distributions including Required Minimum Distribution Participant deferrals Vested benefits Reconciling each participant account and resolution of any other errors associated with participant accounts Independent review and reconciliation of client census Independent analysis of client vs. vendor data Oversight and monitoring of contributions, reports and fees assessed by the investment company. Plans operations review to ensure they are following the legal Plan Document. Audit support

A bond must be obtained for Plan "fiduciaries." A Plan fiduciary is any person or entity who handles the Plan's assets, including, but not limited to, the Plan Administrator, Trustee and Employer. The minimum bond required is generally the greater of $1,000 or 10% of the assets of the Plan. However, the amount of the required bond might be higher if a certain percentage of the assets are in investments that have a higher risk of loss due to fraud or dishonesty (e.g., real property). However, a bond need not be secured for fiduciaries that are banks or insurance companies. Bonding is also not required when the employer sponsoring the Plan is wholly owned by an individual and/or his or her spouse (whether or not in the form of a corporation) or one or more self-employed individuals (and their spouses) and where such individual(s) and spouse(s) are the only employees.

A Summary Plan Description (SPD) is required to be distributed to each participant. The SPD is to be written in easily understood language, and its purpose is to describe the benefits offered under the Plan, the rights of participants, and other important provisions. For a plan amendment and restatement, a new SPD, incorporating modifications to the Plan, must be furnished to participants no later than 210 days after the close of the Plan Year in which the change was adopted. We recommend, however, that the SPD be distributed as soon as administratively feasible. The Plan design may be complex and the regulations and other laws affecting the plan are detailed and complex. As such, they may be difficult to explain in the SPD using easily understood language. If there is a conflict between the terms of the Plan and the SPD, many courts will require that the Plan follow the provisions that are more favorable to participants. As in all matters pertaining to the Plan, you should not hesitate to engage the services of a professional advisor in drafting the SPD. The Department of Labor has the authority to request a copy of the SPD, and can impose a civil penalty for failure to comply with such request within 30 days

There are actually 3 categories of participants when it comes to your retirement plan. The first is the group of employees that are actively working and actively participating. The second group are those employees that are actively working for the organization and are eligible to participate but have not (yet) elected to do so. The last group is often the one most frequently forgotten; that is the group of former employees who have separated from service but continue to have a balance remaining in the plan.

"HCE" stands for Highly Compensated Employee. There are 2 situations that make an employee an HCE. 1. Employees who own more than 5% in the business at any time during the current or prior year, without consideration for compensation. 2. Employees who receive compensation from the business beyond the IRS' stated threshold. For the 2022 plan year, that threshold is $135,000. The reason this matters is because the IRS wants to make sure these folks do not benefit disproportionally more than the non-highly compensated employees. In order to confirm this, the plan must be run through several non-discrimination tests, depending on plan design.

An employee is considered to be a key employee if he or she meets at least one of the three tests. 1. An employee owning more than 5% of the employer is a key employee. Attribution rules apply so family members of a more than 5% owner would be key employees. 2. An employee owning more than 1% of the employer and having an annual compensation exceeding $150,000 is a key employee. (*2023 compensation) 3. An employee satisfying the officer test of being an officer with annual compensation of at least $215,000 (as indexed) would be a key employee. (*2023 compensation)

Forfeitures occur when employer funds (i.e. profit sharing or match allocations) need to be removed from a participants accounts. When an employee leaves before these contributions are fully vested, the non-vested portion is given back (forfeited) to the plan. When this occurs, your plan will have a forfeiture balance that needs to be used timely. These funds can generally be used in 3 ways: redistribute to all active eligible participants. apply the funds toward reasonable plan expenses (i.e. fees from your tpa or auditor) use the funds to offset a future Employer contribution (i.e. match or profit sharing)

Each year, your retirement plan is required to go through several non-discrimination tests. This is to ensure that everyone in the plan is benefiting from the plan; not just the owners or highly compensated folks. If you plan fails one of these tests, corrections (sometimes costly ones) are needed. A Safe Harbor plan that is built in such a way that the plan is given an automatic "pass" on certain tests. The plan gets a free pass on the Actual Deferral Percentage (ADP) test, the Actual Contribution Percentage (ACP) test, and the Top Heavy test. Additionally, your highly compensated and Key employees can maximize their contributions to the plan. There are 3 main types of Safe Harbor designs: Basic Safe Harbor match : The company matches 100% of all employee 401(k) contributions, up to 3% of their compensation, plus a 50% match of the next 2% of their compensation Enhanced Safe Harbor match: The company matches at least 100% of all employee 401(k) contributions, up to 4% of their compensation (not to exceed 6% of compensation) Safe Harbor non-elective: The company contributes at least 3% of each employee’s compensation, regardless of whether employees make contributions Key points to remember about these designs: All safe harbor employer contributions are always 100% vested right away. Once you establish a safe harbor design, you are committed to that contribution until such time as you choose to amend the plan for a future year. Plans with a safe harbor design are required to provide an annual notice.

A match based on payroll period is calculated by applying the matching formula to the compensation deferred upon each pay period. An annual match is calculated by applying the matching formula to the annual compensation of the participant. If the matching contributions are on an annual basis, but are remitted throughout the year, a trueup is likely to be needed. For example, if a participant defers 8% the first half of the plan year and defers only 2% the second half of the year with matching up to 5%, the match the participant is entitled to receive would be greater on an annual basis than on a per payroll period basis.