* DEADLINE TO HAVE PAPERWORK SUBMITTED IN GOOD ORDER IS JUNE 17TH, 2022 *
TRPC is currently preparing IRS-required “Cycle 3” plan document restatements, which must be completed by the July 31, 2022 deadline. Below is a description of the Cycle 3 plan document and TPA services that TRPC provides for Individual 401(k) plans. Note that the services described below are not available to an existing Individual 401(k) plan sponsor who 1) requires any custom document work and/or 2) has any common law W-2 employees (not including the spouse of the business owner) who is/are eligible for the plan.
The fee schedules for Plan Document Services and Third Party Administration Services are provided in the Service Elections Form under “Getting Started” below.
“Cycle 3” Plan Document Restatement for an Individual 401(k) Plan
TRPC’s Cycle 3 Individual 401(k) plan document follows a standardized format that doesn’t require you, as the “plan sponsor”, to make any selections. The document already includes all features and provisions to which you might ever need access, making it so that it will never be necessary for you to amend the plan in the future (unless/until you ever have any employees satisfy the plan’s eligibility requirements). Included in TRPC’s Cycle 3 Individual 401(k) plan document are the following features:
- Pre-tax 401(k) contributions
- Roth 401(k) contributions
- After-tax non-Roth contributions
- Discretionary “matching” contributions
- Discretionary “profit sharing” contributions
- In-service withdrawals/rollovers
- Hardship withdrawals
- Participants loans
Third Party Administration (TPA) Services for Individual 401(k) Plans
While some Individual 401(k) plan sponsors do not require the ongoing services of a third party administrator (TPA) to maintain the plan’s tax-qualified status, most do. Your Individual 401(k) plan will likely require the services of a TPA if either of the following are true:
The total amount of plan assets in your Individual 401(k) Plan exceed $250,000
Why? Once an Individual 401(k) Plan’s assets exceed $250,000 the plan is required to file an annual Form 5500-EZ with the Internal Revenue Service (IRS). Failure to file the annual Form 5500-EZ can result in penalties and in some cases plan disqualification. A TPA can help to ensure that the Form 5500-EZ is completed correctly and that it’s filed by the annual deadline.
You have money from different types of contributions in a plan account
Why? Different types of retirement plan contributions are subject to different rules for tax purposes. As examples: 1) IRS rules prohibit 401(k) contributions and their earnings from being withdrawn or rolled out of the plan to an IRA by an active participant prior to age 59.5, 2) loan repayments must be made at least quarterly and a loan generally must be repaid within five years, and 3) any Roth or after-tax money must be tracked separately from the plan’s pre-tax money. A TPA will do an annual “valuation” to determine the exact balance in each “money source” as of the end of each year.
Paperwork to get started
In order for us to get started setting up the service arrangement for your 401(k) plan we will require the items listed below.
Service Elections Form (click the link to download)
Please select the services you’d like TRPC to provide and either 1) apply a digital signature to the PDF or 2) print, sign/date, and scan to PDF format. Return a signed copy at the secure link below.
TRPC Plan Setup Form (click the link to download)
Please complete the highlighted fields and return the completed form to us at the secure link below. (It does not need to be signed/dated.)
Authorization Agreement for Direct Payments via ACH (click the link to download)
TRPC requires that all service fees be paid automatically via ACH. Please complete all fields and either 1) apply a digital signature to the PDF or 2) print, sign/date, and scan to PDF format. Return a signed copy at the secure link below.
Current Plan Document “Adoption Agreement”
Please also provide a complete, signed copy of your current plan document “Adoption Agreement”, along with any amendments you’ve made to the plan.
Return Your Completed Paperwork
Please return the completed Service Elections Form, TRPC Plan Setup Form, Authorization Agreement for Direct Payments via ACH, and your current plan document “Adoption Agreement” (if you have it) at the secure link here. Please return all items together at the same time rather than returning them separately at different times.
Cash Balance Plans
Cash balance plans are a type of defined benefit retirement savings plan that enables business owners to make significant tax-deductible contributions each year and to accumulate significant retirement savings on a tax-deferred basis. While 401(k) plans – as defined contribution retirement plans – limit total annual contributions to $61,000 (indexed), annual contributions to a cash balance plan generally depend on the owner’s age and income and often exceed $200,000. Most self-employed individuals who have a cash balance plan also maintain a 401(k) plan.
If you’d like to learn more about cash balance plans please contact Scott Cloud, MBA, CPC at [email protected] or 615-515-4419.
* DEADLINE TO HAVE PAPERWORK SUBMITTED IN GOOD ORDER IS JUNE 17TH, 2022 *