Administration

Managing your Plan involves clear understanding of requirements, processes and administration of the Plan. AFPlanServ stands ready to guide and assist you with your Plan administration. 

Once you have established your Plan, you are required to maintain operational compliance with your Plan document. Your Plan must stay up to date with regulatory and legislative changes to the applicable Internal Revenue Code sections. We will provide updates for your Plan document as needed to comply with future guidance issued by the Internal Revenue Service or legislation. 

Our staff will also work with you on any changes in your benefits to your Plan. 

 

All account transactions, including distributions and loans, must be properly documented. Approval of each transaction cannot be based on information from only the participant. Therefore, we use information from the participant and the provider(s) to approve transactions. This helps employers meet the Treasury Regulations about transaction approvals. 

Monitoring of Plan Contribution Limits:

We provide ongoing monitoring of contribution limits for Plan participants across multiple providers. This helps ensure that contribution amounts do not exceed allowable amounts. It also lowers the risk of excess contributions. We will notify both the Provider and the employer if there is an excess contribution. 

Excess Contribution during the Current Calendar Year:

If discovered within the same calendar year, we request the:

• Provider refund the excess amount to the Employer
• Employer stop payroll deductions
• Participants complete a new salary reduction agreement

Excess Contribution during the Previous Calendar Year:

If discovered after the end of the calendar year, we request the:

• Provider process a corrective distribution to the Participant
• Participant complete a new salary reduction agreement

The Internal Revenue Service (IRS) audits every type of qualified plan. So, it's important to maintain policies and information that demonstrate compliance. Should an audit occur, AFPlanServ will provide reports of your Plan activity upon request, including:

Year-to-Date Reports:

• Contributions: Total amount of contributions made by Plan participants to approved providers
• Distribution information: Total amount of distributions made to Plan participants from providers
• Loan: Total amount of loans taken by all Plan participants
• Hardship: Total amount of hardship distributions made to 403(b) Plan participants from providers

Asset Account Balances:

• Provider: Total account balances, by provider, of all Plan participants
• Participant: Total account balances, by participant, of all Plan providers

The Internal Revenue Code (IRC) requires 403(b) Plans to meet Universal Availability requirements. To meet these requirements, employers must provide an eligibility notice at least annually to eligible employees. The IRC suggests that notification be sent in the same manner as other important correspondence. AFPlanServ will provide a sample notice to employers to help satisfy Universal Availability requirements. 

Employers should maintain written procedures for distributing eligibility notices.

This could include:

• Copies of the notices provided
• Lists of employees notified
• If notification was mailed or emailed
• All data relevant to show meaningful notice was provided to all employees

Requirements: 

All eligible employees must be provided the opportunity to enroll in the 403(b) Plan or change their contribution level at least once a year. Communication of eligibility to all employees is a main focus of Internal Revenue Service audits. We will help provide notification language annually and are available to answer any questions you may have. 

The notice must include:

• When employees may make elective deferrals
• How an employee can change an election and how often elections may be changed

The Internal Revenue Service(IRS) began Plan audits in 2010. There are a number of areas that you must be aware of in order for your Plan to remain in compliance. Key areas of focus for IRS audits include: 

Plan Documentation: Employers should maintain copies of their Plan documentation, including the Plan document and all amendments to the Plan from inception. 

Annual Provider Review: Employers should maintain written procedures outlining the process for an annual review of each provider, which should include a review of:

• Administrative forms, custodial agreements, and annuity contracts
• Hardship or unforeseeable emergency distributions and loans
• Distribution procedures, including periodic and non-periodic distributions
• Procedures for tracking when participant reaches the age 70 ½ for required minimum distribution (RMD), calculation of the RMD, and when the Form 1099-R is provided
• Procedures for handling state withholding

Automatic Distributions of Small Account Balance: Employers should maintain written procedures outlining the process for handling automatic distributions and rollovers of accounts under $7,000 in value.

Computer Records: Employers should maintain computer records to keep track of Forms W-2, W-3, and Forms 1099, 940, and 941 and master payroll files.

Contribution Limitation Monitoring: Employers should have written procedures for monitoring the multiple contribution limits under Plans, including the regular annual limits, 3-year catch-up (457(b) Plans), 15-year catch-up (403(b) Plans), and age 50 catch-up provisions.

Corrective Procedures: Employers should have procedures on correcting excess contributions, excess deferrals, and documentation on those corrected and reported.

Counting Years of Service: Employers should have a consistent procedure for counting of years of service for permanent part-time employees (partial years), substitute teachers, temporary employees, retired rehired full-time and part-time employees, and counting the hours if the Plan excludes employees under the "20-hour rule."

Employee Deferral Procedures: Employers should maintain written procedures outlining the process for submitting employee's deferrals to the vendor or third-party administrator and how often the deferrals are submitted.

Employee Eligibility: Employers should have consistent policies to determine which employees are excluded from and eligible to participate in any retirement Plan offered by the employer.

Employee Plan Information: Employers should maintain copies of all benefit booklets and/or enrollment materials available to employees from the Plan's inception.

Forms: Employers should maintain copies of all administrative forms, including salary reduction agreements, generally for seven years.

Hardship or Unforeseeable Emergency Withdrawal Procedures: Employers, or their third-party administrators, should maintain written hardship or unforeseeable emergency distribution procedures, including records of participants who have received such distributions; copies of the applications for such distributions and if self-certification is not permitted, back-up information to verify the participant's hardship or unforeseeable emergency; copies of any form 1099-R for 403(b) Plans or form W-2 with distributions for 457(b) Plans. If vendors are involved in the approval process, the employer must maintain copies of the vendors' procedures, distribution notices and forms also.

Loans and Deemed Distribution Procedures: Employers should maintain written procedures for approving participant loans, tracking participant loans, and reporting of deemed distributions, along with copies of withholding notices and 1099-Rs.

Operational Compliance: Each employer should have procedures for monitoring Plan requirements and compliance with all Plan document provisions.

Qualified Domestic Relations Orders (QDROs): Employers should maintain written procedures outlining the process for handling Qualified Domestic Relations Orders and any administrative information associated with such distributions.

Regulatory Updates: Employers should have a procedure for staying informed on regulatory and legislative changes affecting 403(b) and 457(b) Plans.

Universal Availability: Employers should have procedures for complying with the Universal Availability rule for 403(b) Plans. This could include the process for providing Universal Availability notices and copies of the notices on lists of employees notified if mailed or emailed

 

The fee is $1.00 per Plan participant per month for administrative services including, but not limited to:

• Establishing a written Plan document
• Assistance in obtaining properly executed information-sharing agreements
• Account transaction monitoring and approval
• Ongoing compliance assistance
• Plan documents and reporting to the employer
• Disaster backup for all Plan data
• Consolidated billing, if selected

This fee may be paid by the district or the Plan's vendors. Participants may also be charged a fee for certain individual transactions. 

If the district chooses to have the fee paid by its vendors, then any vendor that declines to pay the fee will be treated as a deselected vendor. To retain the vendor, the district must agree to pay the fee. AFPlanServ can set up split billing to accommodate such situations.