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Many of our clients have similar questions, so we've put together some of the most frequently asked questions and answers below. If you don't see your question in the list, please feel free to contact our team. We'll determine which of our retirement plan experts can offer the best answer and have them respond as quickly as possible.

1. Can I post required notices for my employees on a bulletin board that is in our break room? All employees can go in there and see the notice.
2. Our company just started working on a government contract job. Can we add prevailing wage features to our current retirement plan?
3. What is a “safe harbor” plan? How do I know if it would help my company?
4. When am I required to distribute my annual fee disclosure notice to plan participants?
5. We just realized that our Form 5500 was not filed for a previous year. What do we do?
6. What companies are good candidates for a leveraged ESOP?

1. Can I post required notices for my employees on a bulletin board that is in our break room? All employees can go in there and see the notice.
   
   

   There are guidelines that must be followed when distributing plan information to participants. These guidelines are written to ensure that participants will actually receive the material. Merely posting a disclosure document on a bulletin board does not satisfy the standard prescribed by the Department of Labor. In general, you may either mail the notice via first class mail to the participant’s home; hand deliver the notice to the participant at work; or use electronic disclosure methods that are designed to reasonably assure actual receipt of the information.
   
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2. Our company just started working on a government contract job. Can we add prevailing wage features to our current retirement plan?

   An employer may decide to discharge some or all of it’s prevailing wage fringe obligation by contributing the required amount into the retirement plan. However, before doing so the plan will need to be amended to include language that addresses the details of how the prevailing wage fringe will be allocated. There are special considerations to be made with respect to eligibility, vesting, contribution timing, and coverage and nondiscrimination testing. There can be many benefits to an employer who chooses to discharge the required fringe payment in some means other than cash, but the employer must be careful to work with a consultant that understands the complexities of the prevailing wage laws as they interact with ERISA. RMS has a group of prevailing wage plan practitioners who can answer your questions and help you add this feature to your retirement program.
   
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3. What is a “safe harbor” plan? How do I know if it would help my company?
   

   “Safe harbor” is a broad term that is used in various ways in retirement plan administration to refer to regulations that provide specific guidance that employers may follow to ensure that their plan stays tax qualified (for example, “safe harbor hardship distribution rules”, “safe harbor explanation” for distributions, etc.) However, generally when you hear the term “safe harbor plan”, it is referring to a 401(k) plan in which an employer agrees to provide a certain minimum contribution to plan participants in return for being able to eliminate the ADP and, possibly, ACP testing that would otherwise be required. Employers may choose between two types of contributions, either a safe harbor nonelective contribution or a safe harbor matching contribution. The benefit of eliminating the testing is that highly compensated employees (HCEs) will be allowed to defer up to the 401(k) limit without having to worry about having refunds. RMS has proprietary programs to run projections that give an employer an idea of what the different safe harbor contributions will cost and the benefit that can be gained by using a safe harbor contribution.
   
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4. When am I required to distribute my annual fee disclosure notice to plan participants?

   Plans that allow participants to direct their own investments must provide participants with a fee disclosure notice that describes the investment information, including details about fees and expenses; comparative charts; and access to a glossary of relevant terms. Plan administrators of individual account plans are required to provide the participant fee disclosure to new participants when they first become eligible for the Plan, and thereafter at least once in any 14-month period.

   
   
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5. We just realized that our Form 5500 was not filed for a previous year. What do we do?

   The annual Form 5500 is due to be filed within 7 months after plan year-end, with an additional 2 ½ months allowed if an extension is requested. If the Department of Labor has not yet notified the employer that a filing is past due, the employer may voluntarily file the form using the Delinquent Filer Voluntary Compliance Program (DFVCP). This program gives delinquent filers the chance to comply with ERISA’s annual reporting requirements and pay a reduced penalty amount. The maximum penalty for a single late filing is $750 for a small plan and $2,000 for a large plan. For plan administrators who have failed to file for multiple years, the cap for all filings combined is $1,500 for a small plan and $4,000 for a large plan. These reduced fees are substantially less than the statutory fees that the IRS and DOL may assess for plans that do not come forward voluntarily. If the employer receives an IRS late-filer penalty letter, the plan can still participate in the DFVC program. However, if the employer receives a Department of Labor Notice of Intent to Assess a Penalty, the plan is no longer eligible to use the DFVC program.
   
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6. What companies are good candidates for a leveraged ESOP?

   Only a small number of companies make a good fit for a leveraged ESOP – an ESOP that borrows money to buy out a retiring owner. Here is a list of items to consider when thinking about setting up an ESOP:
   
   -Usually the ESOP works better if there are at least 50 employees;

   -You want at least $3,000,000 worth of employer stock to be sold to the ESOP to justify the set-up and administrative expenses;

   -The ESOP may be more attractive if the corporation is, or can be converted to, an S corporation;
   
   -The fair market value of shares sold to the ESOP should not exceed 2 – 2.5 times annual payroll;
   
   -There needs to be a sufficiently large amount of cash flow to service the annual debt payments and buy back shares from employees who terminate.
   
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