CUNA Mutual Group Proprietary Reproduction, Adaptation or Distribution Prohibited © 2014 CUNA Mutual Group, All Rights Reserv ed.

Ryan Gray, CPC, QPA, QKA Sr. Client Services Consultant - Retirement Plans

Year-End Information Request

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Presenter

• Sr. Client Services Consultant - Retirement

Plans • CUNA Mutual Group • 800.356.2644, extension 665.8399 • Ryan Gray, CPC, QPA, QKA • Ryan.Gray@cunamutual.com

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Before we start…

• Session will be recorded and available on Benefits for You

• Questions welcome at the end of the webinar • CUNA Mutual Group and MCUE Plans • Dates listed are for calendar year (1/1-12/31) plans

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Agenda

• Why the year-end information request is important

• Availability and due dates

• Reporting compensation

• How to complete year-end information on Benefits for You

• Best practices

• Recap and Q&A

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Why the Year-End Information Request is

Important

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Compliance Testing

• Employee Eligibility • 402(g) Excess Deferral Contribution Test

– 401(k) Plans Only – Employee deferral contributions (total pre-tax and Roth) – $17,500 for 2014 ($18,000 for 2015) – Refunds due by April 15, 2015 (avoids double taxation)

• Average Deferral/Contribution Percentage (ADP/ACP) Nondiscrimination Test – Highly Compensated Employee (HCE) – 401(k) or Thrift Plans Only – Refunds due by March 15, 2015 (avoids excise tax) or – December 31, 2015 (employer subject to 10% excise tax) – Prior year testing allows HCEs to know in advance what they can defer during year – Refunds due by June 30 if Eligible Automatic Contribution Arrangement (EACA) – Does not apply to Safe Harbor Plans

• 415 Annual Additions Test – Total of employee and employer contributions – $52,000 for 2014 ($53,000 for 2015) – Refunds due by December 31, 2015

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Compliance Testing

• 404 Limit on Contributions – Employer contributions limited to 25% of eligible employees’ compensation – Due date dependent on tax filing deadline

• 410(b) Coverage Test (HCE Employee Plans Only) – Generally must cover 70% Non-Highly Compensated Employees – Corrections must be made within 9½ months after plan year end (10/15/2015)

• 414(s) Compensation Test (HCE Employee Plans Only) – Plan compensation exclusions cannot discriminate in favor of HCEs – Generally required if plan excludes bonuses, overtime, commissions, and/or

incentives – Not required if plan only excludes reimbursements, expense allowances, fringe and

welfare benefits etc. – Corrections must be made within 9½ months after plan year end (10/15/2015)

• 401(a)(4) Benefits, Rights and Features (HCE Employee Plans Only)

– Determine if certain benefits are available to a nondiscriminatory group of employees – Corrections must be made within 9½ months after plan year end (10/15/2015)

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Compliance Testing

• 416 Top Heavy Test – Top heavy if >60% of total plan balances belong to Key Employees – Key Employee is defined as:

• >5% owner; • >1% owner earning >$150,000; or • Officer earning greater than $170,000 in 2014 and 2015

– Minimum allocation generally 3% of 415 compensation • Minimum Funding Requirement

– Money Purchase/Target Benefit Plans Only – 10% excise tax if minimum contribution not made timely – Due September 15, 2015

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Annual Communication/Reporting

• Contribution Allocation – CUNA Mutual will calculate and allocate employer match and/or profit

sharing contributions upon request (if applicable)

• Match and Employer Contribution Verification Reports

• HCE Deferral Percentage for 2015, if using prior year testing

• Valuation/Audit Package

• Notification of Testing Results

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Deferral Contribution Verification • No longer need to report employee pre-tax and Roth salary deferral

contributions; we will use contribution amounts reported each payroll

• Contributions Reconciliation Report available on Benefits for You under Reports tab if you would like to reconcile salary deferrals

• Can report deferral underpayments via Benefits for You – Will be considered late deposit – Corrective action includes calculating and submitting lost opportunity

earnings and filing Form 5330 for 10% excise tax on earnings

• Contact Retirement Service Center if you have overpayments – Do not submit negative amounts on deposit form

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Availability and Due Dates

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Availability

• Year End Information Request will be available on Benefits for You on December 15, 2014

• Primary and Secondary contacts will receive e-mail that Year End Information Request is available during the week of December 15th

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Due Date to Return Year-End Information Request

• January 21, 2015, for plans with HCEs

• March 31, 2015, for plans without an HCE

– Timely completion of IRS testing

– Contribution allocation

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Administration Completion Dates

• Completion date of administration contingent on:

– Date year-end information is received

– Receipt of complete and accurate information • $250 re-run fee may apply if data is incomplete or inaccurate

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Government Reporting Due Dates

• Form 5500 – Due to Employee Benefits Security Administration (EBSA) by July 31, 2015 – Due to EBSA on extension by October 15, 2015

• Summary Annual Report (SAR) – Due to participants by September 30, 2015, if 5500 filed by July 31, 2015 – Due to participants by December 15, 2015, if 5500 is filed on extension

• Form 8955-SSA – Due to Internal Revenue Service (IRS) by July 31, 2015 – Due to IRS on extension by October 15, 2015

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Reporting Compensation

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Plan Compensation

• What is plan compensation? – Plan compensation is used to determine contribution amounts in the plan

• Where is the plan compensation defined? – Adoption Agreement on Benefits for You

• Quick Links/Documents/Forms/Notices • Adoption Agreement and Plan Amendments

– CUNA Mutual Plans Section 26 – MCUE Plans Section 3

• Why provide both gross and plan compensation? – Different IRS tests use different compensation

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Year End Information Request

• Gross compensation

– Includes all compensation paid during year

– Recommend using payroll report that specifically lists gross compensation

– W-2 may not include all compensation (e.g. Flexible Spending - Section 125)

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Excluded Compensation

• Reimbursements, expense allowances, fringe and welfare benefits, etc. Examples include: – Distributions from 457(b) and 457(f) plans – Taxable group term life (GTL) for insurance over $50,000 – 3rd party sick pay – Short-term disability benefits – Long-term disability benefits – Split-dollar life insurance

• Severance pay

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Post Severance (415) Compensation

• Compensation paid after last day of employment

• Report pre- and post-termination compensation (i.e. total gross compensation) on the Year End Information Request

• Report post-termination, excluded compensation as “other” under the excluded compensation column on the year-end information request

• Refer to most recently signed 415 amendment

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Other Types of Excluded Compensation

• Bonus

• Overtime

• Commissions

• Other exclusions – Miscellaneous incentives – Compensation in lieu of health insurance

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Example

• Shawn’s Gross compensation = $50,000 – Bonus = $5,000 – Auto allowance = $1,000 – Taxable group term life = $1,000

Definition of compensation for the Plan – 401(k) Plan excludes reimbursements, fringe and welfare benefits, etc.

• What compensation is included on year-end information request? • $50,000 (gross compensation)

• What compensation is listed as excluded compensation and where is this

information entered? • $2,000 (auto allowance and taxable group term life)

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Compensation for New Plan Participants

• New plan participant is an employee who meets the plan’s eligibility requirements for the first time during the plan year

• Report gross compensation and any excluded compensation for the full year

• Report gross compensation and any excluded compensation from participant’s initial eligibility date through end of plan year

• No need to list compensation from date of entry if employee begins making 401(k) contributions during the plan year but was previously eligible to contribute to the plan

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Example 1

• Hannah – 1/1/2014 – 12/31/2014 Plan Year – Plan excludes overtime – Eligible 4/1/2014 – Compensation:

• 1/1/2014 – 12/31/2014 = $40,000 gross, $1,000 overtime • 4/1/2014 – 12/31/2014 = $30,000 gross, $750 overtime

– What compensation do you report on census? • $40,000 (full year gross compensation) • $1,000 (full year excluded compensation) • $30,000 (gross compensation from date of entry) • $750 (excluded compensation from date of entry)

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Example 2

• Hannah – 1/1/2014 – 12/31/2014 Plan Year – Plan excludes overtime – Compensation:

• 1/1/2014 – 12/31/2014 = $40,000 gross, $1,000 overtime • 4/1/2014 – 12/31/2014 = $30,000 gross, $750 overtime

– What if Hannah’s entry date was 4/1/2013, but she started contributing on 4/1/2014? • $40,000 (full year gross compensation) • $1,000 (full year excluded compensation)

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Military Differential Wage Payments

• Include in gross compensation

• Most plans include for plan purposes

• Refer to the Amendment for Pension Protection Act (PPA) and HEART Act – Benefits For You

• Documents/Forms/Notices • Plan Amendments

– PPA and HEART Act Amendment

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How to Complete

Year-End Information Request on Benefits for You

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Year-End Information Request

• Submit your year-end information electronically on Benefits for You

• Overview

• Complete each form • Certify and submit

– Includes Employee Data

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Overview

• Begin with the

Overview

• Overview includes – COLA Limits – Due Dates – Frequently Asked

Questions (FAQ)

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Adopting and Related Entity

• Affiliated employers – Report any changes in

affiliation

– Plan document may need to list affiliated employers

– Testing may need to include affiliated employees

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Adopting and Related Entity

• Additional information may be required if affiliated with another employer – Name – EIN – Entity Type – Ownership %

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Officer & Owner Employees

• Highly Compensated Employee (HCE) and Key Employees

• HCE – Based on compensation

earned in prior plan year – $115,000 2013 – $120,000 2014

• Key – Based on compensation

earned in current plan year

– $165,000 2013 – $170,000 2014

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Match Contribution

• Discretionary match contributions – Do not need to complete if

fixed match is listed in adoption agreement

• CUNA Mutual Adoption

Agreement – Section 30

• MCUE Adoption Agreement – Section 6

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Employer/Profit Sharing Contribution

• Discretionary Profit Sharing – Do not need to complete if you have

a fixed profit sharing contribution in adoption agreement

• Indicate the formula or percentage of profit sharing contribution - Add information as requested - Identify if all the contributions have

been deposited or if allocation is required

• CUNA Mutual Adoption Agreement

– Section 31

• MCUE Adoption Agreement – Section 7

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Union and Leased Employees

• Union Employees – Identify union employees on

census – Excluded from testing – Notify us if union has

decertified • Leased Employees

– Contact Retirement Consultant

– May be eligible for plan as leased employee if work on substantially full time basis (generally 1,500 hours and 12 months)

– If leased employee is hired full time, prior service as leased employee counts towards eligibility and vesting

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Military Leave

• USERRA Requirements – Rights upon re-employment

– Click the Instructions link for

additional information

– Contact Retirement Consultant if you have employees returning from military service

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Timing of Deposits

• Deposits – Submit as soon as

administratively feasible – 7 business-day safe harbor

rule for single employer plans with <100 participants

• Late Deposits – Need to report late deposits

on 5500 – VFC program to correct – Top audit item for DOL

• Submit deposits on or before payroll date – We will now process day

prior to payroll date so that deposits are effective on payroll date

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Partial Plan Termination

• Partial Plan Termination

• Reduction in workforce of 20% or more

• Terminated employees may automatically be 100% vested

• Partial Plan Termination defined, click on

Instructions link

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IRS Form 5500

• ERISA bond coverage – Required on 5500 – Provide amount if bond

coverage is not with CUNA Mutual Group

• Form 5500 – Provide name and e-mail

address of signer – Invitation to file 5500 will be

e-mailed to signer • Audited plan

– Generally more than 100 participants

– Include auditor information

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Certify And Submit

• Provide information for contact person, if we have questions

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Certify And Submit

•Employee data template relocated •Improved, pre-filled template includes:

• Name • SSN • Birth Date • Hire Date • Termination Date • Entry Date • Highlighted columns for the

participants with mid-year entry dates •You provide:

–Hours, if less than 1,000 –Gross compensation –Excluded compensation –Mid-year compensation (highlighted in orange)

–Missing dates –New employee Information

•Certify that information provided is complete and accurate

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Submitting Revised Compensation

• New link will appear next to the “Completed” column when you access the Year-End Information Request

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Employee Data

• Terminated employees – Complete Retirement Plan Distribution

Form – Report available on Benefits for You

• Defer if vested balance greater than $1,000

• Cash out if vested balance is less than $1,000

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Recap and Q & A

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Recap

• Report all employees on payroll during the year

• Check compensation reported – Review Plan’s definition of compensation – New participants entering mid year

• Review salary deferrals listed on Box 12 of W-2 – Double check to ensure that deferrals withheld from paychecks were

allocated correctly in plan

• Credit Union Movement Service

• Employees returning from military service - contact Retirement Consultant

• Auditor information for large plans

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Contact Information

• Retirement Plan Consultant – Complex eligibility issues – rehires – Compensation – Nondiscrimination testing – Audit questions – IRS/DOL/ERISA compliance issues

• Retirement Service Center – General year-end information questions – Navigate year-end information request on Benefits for You

Call: 800.999.8786 Email: prc_mail@cunamutual.com

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Questions?

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Disclaimer

CUNA Mutual Retirement Solutions is a division of CUNA Mutual Group and the marketing name for CPI Qualified Plan Consultants, Inc., a CUNA Mutual Group member company. CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Annuity insurance products are issued by CMFG Life Insurance Company, located in Madison, Wisconsin. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Securities distributed by CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 866.512.6109. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not obligations of or guaranteed by the financial institution. Representatives offer retirement and investment education but do not provide investment, legal or tax advice. Participants are encouraged to consult their own advisors. 401k-1070861.1-1214-0117

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