June 2007 Pension Plan tip of the month...

Annual Administrative Reports/5500 Package

Every year, we provide each of our clients a compendium of administrative reports pertaining to their Plan. This package is sent annually and broadly represents the activity and compliance work for the Plan for the designated Plan Year.

The package comes in one of two formats based upon each client’s preference; either a hardcopy binder or CD. Typically accompanying the binder or CD are two important items; a cover letter and the 5500 filing.

The cover letter provides a synopsis of Plan items and issues. It is imperative to review all items on this letter and respond accordingly.

The 5500 is a time sensitive document. Please review its cover instructions concerning when and where to file it.

Year end Binder or CD

Below is a brief summary of additional features and information to be found in the annual binder or CD.

Introductory Reports-The report begins with a cover page identifying the Plan name and reporting period followed by pages listing some of the major Plan specifics including eligibility requirements and vesting schedule as well as the Plan’s Asset Reconciliation which gives an overview of account financial activity.

Census – This gives a complete demographic listing of all participants and/or current employees of the Plan sponsor. This report is particularly important in showing employee status, entry date and years of credited service.

Contribution – Applicable reports might include a Contribution Analysis listing each participant and their contributions, a Maximum Employer Deductibility report helping to determine appropriate deduction levels and an Allocation Report detailing any employer contribution and corresponding rates by participant.

Compliance Testing – The applicable compliance tests for the Plan are contained in this section. This section gets into the details of required plan discrimination tests These may include ADP/ACP testing of 401(k) deferrals and corresponding matching contributions, 410(b) coverage analysis, 401(a)(4) measuring benefit levels, 416 testing determining the Plan’s Top-Heavy status and Section 415 testing the annual additions limitation for each participant. Each compliance test is important in its own way and each is required to be satisfied in order for the Plan to keep its tax qualified status.

Summary of Accounts – Reports applicable account activity by participant including contributions, distributions and earnings for the period. Beginning, ending and vested account balances are listed. Also included is a Plan summary account of all participants by money source.

Government Forms – A copy of the unsigned 5500 and all attachments for your files, as well as, a copy of the Summary Annual Report which is given to all participants is included here.

Miscellaneous – Additional pertinent reports would be contained here such a the Terminee Report detailing any distributions that may have been paid out during the period or terminated participants that still have an account balance.

The requirements for a qualified retirement Plan are vast and complex. This package is just one of the tools used by the Paragon Alliance Group to help keep your Plan in compliance and remain tax qualified. When you receive each package, please review all information and contact your Paragon account executive with any questions you may have. Your account executive will contact you after the package has been sent as well.