FEBRUARY 2008 Pension Plan tip of the month...

401(k) Forms

Important Processing Information

Some important questions have often arisen regarding 401(k) forms:

Using Current Forms:

The first important issue, in order to maintain regulatory compliance, is to make sure all forms are current by printing from the plan sponsor website on an “as needed” basis rather than keeping a supply on hand. In the case of enrollment forms, it’s advisable to order new enrollment kits periodically.  This will ensure that all forms contain the most current tax, investment, and other information. This will also ensure that the Service Operation is able to process forms in the most-timely manner.

Timely Submission:

The second important issue is to be sure that forms are submitted on a timely basis.  It is imperative that enrollment forms for new participants are submitted before contributions are remitted to the investment company to avoid having contributions returned.  Please be aware of your plan’s entry dates and plan eligibility.  If your plan has quarterly entry dates, for example: 1/1, 4/1, 7/1 and 10/1, please be sure to send forms for those periods.

The preceding refers to newly eligible participants. Form submission procedures and timing for those previously eligible could be affected by your plan’s deferral modification provisions. Please contact your account executive if you have any questions.

Where to send forms:

What do I do with Beneficiary Forms?

Your plan record keeper or investment provider may keep copies of enrollment and beneficiary forms in their files. It is, however, advisable that an Employer maintain a record of all beneficiary, change of beneficiary, and spousal waiver forms on file or should have a procedure in place to obtain the most recent forms when needed.  In the event of a participant’s death, the Plan Administrator will be responsible for completing or obtaining the beneficiary information.

What forms should be sent directly to the record keeper (investment firm)?

For the most part, Enrollment forms, Participant Data Change forms, Investment Change forms and Rollover Contribution Election Forms should be sent directly to the record keeper. Some record keepers have differing procedures. Please contact Paragon or your investment advisor if you should have any questions.  Please note that employees most often must make their investment changes using the Internet or an Interactive Voice Response System.

What forms should be sent directly to Paragon?

Unless the process is fully automated, withdrawal forms should be sent directly to us via fax or E-mail (originals should be kept for your files). We will complete certain sections and review the entire form and then they will be forwarded to the investment carrier. Please note that in some circumstances, such as a large balance withdrawal, original forms or endorsements may be required.