Retirement Plan Help - Gov't Agencies

Where do you go for help?  I always suggest starting with your plan administrator with any questions.  What happens if it is clear there is a problem with your retirement plan account and you need help because the plan administrator is not helping or appears to be acting shady?

Briefly, I wanted to go over different government agencies that may be able to help you.

For all qualified retirement plans regardless of type, the Internal Revenue Service (IRS) and Department of Labor (DOL) can be of help:
Employee Benefits Security Administration (EBSA) of the DOL http://www.dol.gov/ebsa/publications/Filingretirementclaim.html
IRS http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1


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Summary Annual Report (SAR) for Your Retirement Plan

What is the Summary Annual Report (SAR)? Once a year, you likely receive a one or two page document for your retirement plan entitled Summary Annual Report. What is it?

Every qualified retirement plan is required to annually report with government agencies. They submit a  form each year and generate an SAR to distribute to plan participants. The SAR is required to be distributed to participants (active and terminated) along with other individuals (death beneficiaries and alternate payees from Qualified Domestic Relations Orders) entitled to benefits under the plan.

The SAR is an aggregate or plan-level summary.  It does not tell you how much is in your account.  So what value is it to you?  The form gives you information about the plan administrator with contact information.  You should already have this information. The form also gives information on obtaining the full form from the Department of Labor (DOL). You are entitled to a copy if you want, but you will not receive much useful information from doing so.

In general, it does not tell you a lot. However, it can warn you regarding potential problems. It is key that you compare expected activity to the year reported on the SAR. If you are a participant in a Roth or 401(k) account who made contributions during the year, employee contributions of $0 is a big red flag.   If you are a participant who rolled over funds from an old retirement plan during the reporting year and you see $0 for rollovers from other plans, that is a big red flag. I also suggest reviewing your statements first. If you see the contributions on your statements and the time frames match up, the SAR likely has a reporting error. I would still recommend following up with your contact at the plan administrator since they may need to file a corrected form with the government.

Let's say you rolled over $100,000 to your current employer's plan from the profit sharing at your last employer during the 2011 calendar year. You see the 2011 calendar year statements and SAR both show $0 in rollovers for that new plan. Your prior employer's statement shows the funds went out and you received an IRS Form 1099-R for the 2011 year. Your plan administrator denies receiving the funds and the old company's plan says the same thing. You may wish to escalate the situation to the Department of Labor's EBSA office or the IRS.


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Retirement Benefits After a Job Loss

If you have left a job recently, you may have concerns over retirement and health benefits.  The Department of Labor has a great resource located on their website at http://www.dol.gov/ebsa/publications/joblosstoolkit.html#.UHc9irS8_ww.  I recommend taking a look if you haven't already done so!  FYI Includes a Spanish-language resource.

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What are the Key Aspects of Your Retirement Plan

As a plan participant, you may be curious about different retirement plan arrangements.  In the following post, http://christinegurneyuspension.com/2012/10/02/ebsa-retirement-plan-comparison-chart/, you can go to a government chart that includes general rules such as vesting that contract different retirement plans.

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Spanish Retirement Plan Materials From EBSA

As part of the EBSA's National Hispanic Heritage Month education efforts, they have included retirement plan related Spanish language materials on their website at http://www.dol.gov/ebsa/newsletter/.  In addition, there are also Spanish language videos on the newsletter website for those fluent in Spanish who might not speak the language. Great education efforts to share with friends and family!

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Participating in a Retirement Plan

On Monday, we commemorated Labor Day.  The law that governs retirement plans, ERISA, was signed into law on Labor Day 38 years ago.  I find it only fitting that we discuss participating in retirement plans this week.  Due to the variety of retirement plans, participation can be an active or rather passive process.  If you are in an defined benefit plan or any retirement plan that only allows for employer contributions and you are unable to direct plan investments, you may only need to complete a beneficiary form.

Regardless of your plan type, you should receive a Summary Plan Description (SPD), or a brief summary of the plan document written at a layman level, within ninety days of becoming eligible for the plan.  If you direct investments, you will need to make a choice on an enrollment or investment election form.  If you are able to make employee contributions, you will also need to make a choice on an enrollment form.  Regardless of plan type, you will need to complete beneficiary forms.  The form will determine how your vested benefit will be distributed if you die.  Sometimes these elections will be on three separate forms or they can all be combined on the same form.  As a result, terms other than investment election, beneficiary or enrollment form may be used by your plan administrator.

I would encourage everyone to participate if they haven't already.  If you think you should be eligible and you haven't received any paperwork or instruction about how to sign up, a brief call to your benefits department may be useful.  They should be able to help you out with signing up or advise you regarding when you should be eligible.  If you are not expected to meet eligibility, for example due to hours worked, they should also let you know that.  Many employers gladly discuss the plan and/or give out SPD's before participants are not even eligible yet, if an employee is interested.  They are not required to, but they often want to share the great benefits that you may qualify for in the future.

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Summary Plan Description (SPD) Part I Vesting

Last week, I touched on different documents that you will want to retain as a plan participant.  A document of particular importance is the Summary Plan Description (SPD).  An SPD is a summary of the plan document written for a layperson to understand.   From my first post about participant statements, you may have noticed an item called vested percentage and/or amount on your statement.  Vested means the portion of your benefit that you have already earned.  Any unvested benefits will not be yours and are considered forfeited or given up when you separate from service.

Any employee contributions you make to your retirement plan are 100% vested.  Based on the type of plan you are in these contributions include:  401(k), 403(b), Roth, Rollover, Voluntary, and Mandatory.  Other names are also used, but the general rule is if you elect your own money to go into the plan, it cannot be forfeited.  Employer contributions can be 100% vested but are typically subject to vesting schedules.  The type of employer contribution is important because different types are subject to different vesting schedules.  This is where your SPD comes in to play.

Are you in a retirement plan that has employer match contributions and employer profit sharing contributions?  You will want to look under vesting in the SPD for the appropriate schedules.  Generally, you will see a table with the number of years of service you need to reach different percentages.  For example, you may be 0% at one and two years of service for profit sharing contributions.  In year three, you become 100% vested.  You will want to check your participant statements to see if they match the service you have earned.  Once you have earned vesting, it cannot be taken away from you.

The SPD should explain how vesting service is calculated.  Some plans are written to only count plan years employed.  More often plan documents are written to calculate based on having worked a certain number of hours.  Most often the requirement is 1000 hours in one year.   However, sometimes a document does not require as high a threshold of 1000 hours and chooses something like 900 hours in one year.  Other provisions to be aware of are restrictions on service you earned prior to establishment of the plan or a certain age.  If those provisions apply, they should be disclosed in the SPD.

Other factors such as amendments to the vesting schedule, lapses in service, grandfathered service, and changes in plan years also affect service.  If you see that your vested percentage is different than what you feel it should be, consult the contact for the plan.  Often times, your participant statement will have a phone number to call.  Some of the other factors mentioned briefly above may explain these differences, and your plan administrator should be happy to provide an explanation.  If there is an error, they should fix the percentage.

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Retirement Plan Paperwork Retention

What paperwork do you need to keep and put together for your retirement plan?   Everyone has different organization requirements, but I will share how I handle my paperwork.  For those of you who prefer digital formats, you can scan all of the documents below onto your computer.  You will also want to retain a back up either electronically or in paper format.  Since we are often updating electronic formats over time, it is very likely that if you store the information as a pdf today, you may not be using pdfs in the future.  Please keep in mind that you may need to update formats as time passes.

As a another caveat, many participants no longer receive paper copies.  You should still be able to save all of this data from the websites you use.  Whether you want to print out a paper copy is entirely up to you.   If you are unable to find the information below, you may just want to set up a filing system going forward.  I would encourage you to go ahead and request a Summary Plan Description (SPD) from your employer.  I will discuss this document in greater detail in future posts.

I create multiple files filed under the specific retirement plan.  As an FYI, I also do a similar file for IRA's.

The first file is for "Elections":

Enrollment/Investment Election Form

Beneficiary Form

Changes to Salary Deferrals

The second file is for the following summaries that participants receive of "Plan Documents":

Summary Plan Description

Summary of Material Modifications

The third file (or files) is for "Participant Statements":

Annual Statements or Statements for the Full Year

Personally, after I confirm the annual statement is correct, I shred trade confirmations and since I receive an annual statement, quarterly statements.   

How long do I keep the data?  Generally, I would keep all of the information above indefinitely for my current employer.  If you are in a situation where you may return to work for the same employer, I would also retain everything until you either do or that seems unlikely to happen.

If you leave your account open after leaving your employer, I would retain the Plan Documents and Annual Statements folders.  Please also note that you will need to confirm that you are updating your statements with your current mailing address.  Often times, statements have an administrator phone number you can call.  Or you can make the changes online.  In other cases, you may make the changes directly with your former employer. With the current economic climate, you will want to update any statements that are out of date as soon as possible.  Many participants become "lost" through employer mergers and acquisitions due to out of date addresses.

If you have already taken a payout from your account and closed it, confirm everything was done properly on your account.  As long as you agree with the payout and believe no additional funds are due you, I would retain no more than the last statement from the plan.  I add it to my rollover documents.   If you did not roll over the data, I would consider adding it to my tax records for the applicable year(s).  

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Reading Participant Statements

For my first post regarding participant issues, I want to let participants know what items I review when I look at my own 401(k) statement.  First, grab your new statement and last statement.  For me, I have the June 2012 and March 2012 quarterly statements.   First, I compare the beginning balance on the new statement to match the ending balance on the prior statement.  Grand totals, per source (for example, 401(k) and match), and per investment fund should all balance.  If they do not and the numbers are substantial, note the differences.

Next, grab your paystubs for the time period associated with your statement.  For me, that was three monthly stubs (April, May and June).  Add up employee contributions withheld. This could be 401(k) and/or Roth contributions depending on what you elected when you enrolled for the plan.  More rarely, different names might be used such as catch-up, pre-tax, after-tax, voluntary.  If you are not sure what should have been withheld, also grab your last enrollment form and confirm that the right dollar amount or percent was being withheld from your paycheck.

Now, I check the employee contributions shown as deposited on the statement against what was withheld from my paychecks during this time frame.  If the dollar amounts do not tie, please note the difference.  In my case, the checks were all deposited before the end of the quarter.  You may have had the last deposited after the end of the statement period.  In that case, deduct your last paystub's employee contributions (for me that would be June 2012) and see if it balances.  You may also need to add in the last amount withheld from the last statement period (for me that would have been March 2012) in the event it was withheld but not deposited before the last statement was cut.  If you still cannot reconcile, note the differences.
Example:
401(k) withheld for March = $10, April = $ 20, May = $20, June = $20
401(k) deposits shown on second quarter statement are $50.
401(k) withheld for second quarter was $60.
$60 does not equal $50.
Difference most likely is due to deposit timing.
Deduct June and add March for new withheld 401(k) total of $50.
Withheld 401(k) now balances to 401(k) deposited.

Finally, I check the employer contribution.  In my case, the employer made a 4% safe harbor match contribution.   I check the calculation to make sure it is correct.
There are numerous match contribution formulas, but in this case, it is 100% of deferrals up to 4% of compensation.
Example:  $20,000 * .04 = $800
Amount of employee contributions was $600 so the match will only be $600.
Amount of employee contributions was $1000 so the match will only be $800.

Any differences you discovered should be reported and discussed with your plan administrator.  There may be adjustments or other reasons for any differences, but if they are not noted on the statement, you will need to ask.  In my case, I have a phone number written on the statement to call if I find discrepancies.  If you do not have that information, you will want to ask who you should follow up with at your employer.

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Hello!

I have designed this blog to address basic issues participants encounter with their retirement plans.  I look forward to feedback, and if you have any questions or issues you would like me to address, please leave a comment!  Unlike other blogs, this website is not affiliated with any companies, and I do not sell products such as annuities.  This blog is created solely to benefit retirement plan participants because I have seen what can go wrong, and I want everybody to be as informed as possible.

I am an enthusiastic pension plan professional with over 15 years of experience.   Currently, I am enrolled to practice before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA).   Additionally, I hold industry certifications of CEBS and ISCEBS Fellow.  I found a love for the retirement plan community while pursuing my BS degree in Actuarial Science.

I am excited to share my views on the pension world, and I hope I can bring additional insight to all interested.  Fresh content is published once a week on Saturday so please be sure to follow me on twitter @ChristineGurney and sign up to follow my blog.   My industry blog is located at www.christinegurneyuspension.com.

Thanks for reading and have a wonderful day!

The Disclaimers
The views expressed on this website/blog are mine alone and do not necessarily reflect the view of my employer.  The views expressed on this website/blog are not intended to substitute for legal advice or any other professional consultation.  The views expressed on this Website/blog are generalized from my life experience and values.  No examples or opinions are directed at any individual, company, government agency or organization.