3. LAR Pensions’ professional staff will help
steer you in the right direction by:
Analyzing your objectives and
exploring existing retirement plans
to determine if a new plan is
warranted or if the existing plan
should be refined
Selecting plan provisions to meet
your objectives such as:
Defining a plan type
401(k)
Profit Sharing
Defined Benefit
Selecting eligibility
requirements
Designing employer and
employee contribution
requirements
Choosing vesting schedules
Defining distribution
features/loan provisions
5. Drafting final Plan/Trust
documentation outlining
the specification and
features of the Plan
Preparing the Summary
Plan Description
(SPD) (an abbreviated
version of the Plan
document) for
distribution to plan
participants
7. It is important to choose a
Financial Institution you
are comfortable with to
hold your Plan’s assets.
Our office is not affiliated
with any specific
Financial or Accounting
Institution; we can work
with any provider as long
as they are able to work
with an outside TPA.
As a result of this, LAR
Pensions is enrolled with
over twelve 401(k)
vendors.
9. Towards the end of each plan
year, you will receive a data
request package requesting
specific plan information for
that time frame.
This package can be
completed by you (the
employer), your CPA or
Financial Advisor. The
information in this package will
provide your Plan Consultant
with basic company
information, an up to date
census & current asset
information.
The table illustrates the
deadline to return the data
request package based on
your plan type or company
entity.
January
30th
All non Safe
Harbor 401(k)
Plans (or
ASAP)
March 10th Corporations
not filing an
extension (or
ASAP)
April 10th Non
Incorporated
businesses not
filing an
extension (or
ASAP)
11. Once we have received
the completed data
request package, your
Plan Consultant will
calculate the Plan
contribution based on
your contribution
objective.
Testing will also be
performed during this
time to ensure the plan is
incompliance with the
necessary coverage and
discrimination tests.
A list and brief description of
these tests can be found in the
table provided under “Step 6:
Valuation Report”.
13. After the contribution has
been confirmed and/or
deposited, LAR Pensions
completes the Plan Trust
Accounting to ensure all
the activities that
occurred during the plan
year was done correctly
and in accordance with
the plan regulations.
14. The Valuation Report is
then prepared based on the
Trust Accounting and is
comprised of the following
exhibits:
Plan Specifications Provides detailed
information on the features
of the Plan
Employee Census Offers thorough information
on the employees of the
company.
Contribution Report Provides detailed
information per participant
on contributions made for
each source such as
Employer Profit Sharing,
Employer Match, Employee
Salary Reduction (401(k)),
etc.
Limit on Deductible
Contributions
Illustrates the total
Employer allocation as a
percent of eligible
compensation. The
maximum Employer
allocation cannot exceed
25% of eligible
compensation.
Account Balance
Statement
Provides a breakdown of
account activity per person,
per source and on a plan
level. The information
reflected on this Statement
is taken directly from the
Trust Accounting.
15. Valuation Report continued…
Top Heavy Test Reflects the Plan’s Top Heavy status for the
upcoming plan year. A plan is Top Heavy if 60%
of its assets belong to Key Employees. If the plan
is Top Heavy, a minimum Employer allocation of
3% must be made to all eligible employees.
401(k) and 401(m) Discrimination Tests Provides a breakdown of each participant’s 401(k)
and Matching contributions as an Actual Deferral
Percentage (ADP) and an Actual Contribution
Percentage (ACP), respectively. The test is
performed to ensure that the Highly Compensated
Employees are not favored in regards to the
amount they can defer or match.
410(b) Participation Test Assures that an adequate amount of employees
are benefiting under the Plan.
401(a)(4) Benefit Percentages/General
Test
This test is used to determine whether or not that
the allocation provided to the Highly
Compensated employees is discriminatory based
on the allocation offered to the Non-Highly
compensated employees.
Participant Account Statement An Account Statement is provided for each
participant with a balance under the plan. The
Statements includes basic census information,
asset information and activity per source as well
as the participant’s vested percent and balance.
17. A 5500 filing must be done for all qualified
plans with a participant and assets above
$250,000 (as indexed). The form must be
filed 7 months after the end of each plan
year or 9 months if on extension.
Based on the demographics of your plan,
one of three forms must be completed:
Form 5500-EZ
Form 5500-SF
Form 5500
18. Form 5500-EZ
Available for one participant Plans
Available for Foreign Plans that are required to file
Form 5500-SF (Short Form Annual Return/Report of Small Employee
Benefit Plan)
Available for Plans with 100 or fewer participants at the beginning of the plan
year
The plan must satisfy the conditions necessary for exemption from an audited by
an Independent Qualified Public Accountant
100% of the Plan assets must be invested in secure investments with an easily
obtainable fair value
The Plan cannot be invested in Employer securities and cannot be considered a
multiemployer plan
Form 5500 (Annual Return/Report of Small Employee Benefit Plan)
Available for Plans with more than 100 participants at the beginning of the plan
year
Required for Plans that are invested in non-qualified assets
Necessary for Plans that are not exempt from an audit by an Independent
Qualified Public Accountant.
20. The final step in the
annual administration
process is preparation
of Distribution
packages for those
employees who
terminated prior to or
during the plan year.
21. Any Questions?
If you have any questions, please refer to our
company website (www.larpensions.com). Or
reach us at (203) 327-5275.
