RPF M2 U4 Tracking Employee Account Information Flashcards
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What is the scenario involving Mike and Yolanda?
Mike, Yolanda’s personnel manager, handles her payroll and sends information to ABC Retirement Plan Services each pay period.
What happens if Mike overlooks a section of the spreadsheet?
If Mike overlooks the section for newly eligible employees, the compliance testing results for Yolanda’s Bowling 401(k) Plan will be incorrect.
Who reviews the testing results and identifies a potential problem?
Brenda from ABC Retirement Plan Services reviews the testing results and calls Mike to clarify.
What is the consequence of Mike’s oversight?
ABC Retirement Plan Services charges Yolanda’s Bowling to rerun the tests due to the missing information.
How is employee data collected?
Employee data is collected by plan sponsors or their payroll providers.
What types of employee data must be tracked?
Employee data includes Social Security number, date of birth, date of hire, and compensation.
How is employee data used?
Employee data is used to calculate eligibility for the plan, amounts of contributions, and to perform nondiscrimination testing.
How can data errors be prevented or fixed?
Data errors can be prevented by ensuring accurate census information and validating data before submission.
What is Balance-Forward Valuation?
A recordkeeping method where the participant’s account balance is updated for activity as of each subsequent valuation date.
What is Daily Valuation?
A recordkeeping method where participant accounts are valued every business day.
What is the responsibility of the plan sponsor regarding employee contributions?
The plan sponsor must contribute employee contributions withheld from paychecks to the plan trust.
What is the safe harbor rule for plans with fewer than 100 participants?
Plans with fewer than 100 participants have a seven-business day safe harbor rule for making their deposits.
What is the maximum deadline for contribution deposits?
The 15th business day of the following month is the absolute maximum deadline for contributions under severe circumstances.
What is the basis in relation to participant accounts?
The basis is the amount of a participant’s account that does not include any gains or losses.
What is the purpose of census information?
Census information is critical for the accurate administration of the plan and is used for eligibility and contribution calculations.
What types of information are included in census data?
Census data includes employee demographic information, dates of birth and hire, compensation, and contribution amounts.
How is census information typically transmitted?
Census information may be transmitted electronically or via automated methods depending on the service provider.
What are the sources of contributions in a retirement plan?
Contributions can be attributable to pre-tax deferrals, Roth contributions, and employer contributions.
What information is used to determine highly compensated employees?
Ownership information and officer status are used to determine highly compensated employees and key employee status.
What is the purpose of prior year compensation information?
It is used to determine whether an employee is a highly compensated employee.
How is census information provided to service providers?
Census information may be transmitted electronically or via forms filled out by the plan sponsor.
What happens if a plan sponsor does not provide census information on a payroll basis?
A request may be made on both a mid-year and/or annual basis for employer contribution calculations and nondiscrimination testing.
What is a census information extract?
It is a file provided by the service provider to the plan sponsor to verify collected census information.
Why is accurate census information critical?
Inaccurate information can cause plan qualification issues that can be expensive to correct.
