NEWSLETTER MARCH 2010

<= /o:p>

Newsletter

April 2010 = ; &n= bsp; = ; &n= bsp; Volume 27 - Number 1

<= /o:p>

This newsletter is addressed to our clients, t= heir attorneys, accountants and other professional advisors. Citations may be = included for those who want to refer directly to the source material. IN THIS ISSUE:

Qualified Plan Reporting Has Entered the Electronic Age - The Department of Labor has implemented EFAST2 which requires that all 5500 Forms be electronically signed and filed.

2009 Form 5500= - A brief summary of the variou= s 5500 Forms that may be filed by retirement plans.

7-Day Deposit Requirement for Small Plan 401(k) Deferrals - The Department of Labor has published a final rule to protect employee contributions deposited to 401= (k) and other pension plans.

Review of Fiduciary Bonding Requirements - The Internal Revenue Service examination of defined contribution plans showed that plans frequently fail to comply with the fiduciary bonding requireme= nts.

Qualified Plan Reporting Has Entered the Electronic Age

The Department of Labor (DOL) now requires that all 55= 00 Forms be electronically signed and filed. This program has been designated EFAST2 and is effective for the 2009 Form year. It requires Form 5500 sig= ners to register for electronic signature credentials at the DOL website. The = only exception is for plans that file Form 5500-EZ. The EZ remains a paper fil= ing with the Internal Revenue Service rather than the DOL.<= /p>

The Department of Labor will not permit this office to obtain the signature credentials for our clients. Each signer must go to = the ERISA Filing EFAST webpage at http://www.efast.dol.gov to register. The procedure is quite self-explanatory; however step by step instructions we= re included in our February letter to all plan sponsors.

The procedure enables a signer to obtain a User ID, password and the PIN needed to electronically sign the Form 5500 each year and to make changes to their signer profile on the DOL website. The User = ID and PIN are your electronic signature. The signer’s email address is the key to linking the signer to the electronic Form 5500 and the mechanism for the DOL to notify the signer to log in to their DOL account to review the filing and apply their electron= ic signature.

Our clients must also notify this office of the signer name(s) and email address(es) after completing the registration process. Please email this information = to efast2@prplans.com.

If you have difficulty in following the registration procedure, feel free to contact our office for assistance. We will be gla= d to go through the steps with you. Unfortunately the DOL has not provided any alternative process for plans sponsors without internet access and email.= So you must have internet access and email if you are a signer on Form 5500 = or 5500-SF.

Please note that we will continue to collect the information and prepare the Form 5500 for your qualified plan or plans as= we have in the past. Copies of the administration reports and Form 5500 will= be provided to you along with the instructions for the electronic filing and signature procedure.

2009 Form 5500

Below is a brief summary of the various 5500 Forms. The Department of Labor has added a new 5500-SF (short form) which may be fil= ed in place of the regular Form 5500 for certain qualifying plans. In addition,= the old Schedule SSA attachment has been replaced by a new Form 8955-SSA. Also note the requirement for certain companies to post the Form 5500 on the company intranet.

Form 5500: The “regular” F= orm 5500 must be filed by plans that do not meet the special requirements for filing either the 5500-SF or 5500-EZ.

Form 5500-SF:<= /span> The SF is a short form and = may filed by plans that 1) cover fewer than 100 participants, 2) did not hold= any employer securities during the plan year, 3) were 100% invested in certain secure, easy to value assets that meet the definition of “eligible = plan assets,” 4) are eligible for the waiver of the annual examination a= nd report of an independent qualified public accountant, and 5) are not a multiemployer plan.

Form 5500-EZ:<= /span> Only a one-participant plan= may file Form 5500-EZ. A one-participant plan is a plan that 1) only covers t= he owners of the business, or owner(s) and their spouse(s), 2) meets the min= imum coverage requirements without being combined with any other plan. 3) does not cover a business that is a member of an affiliated service group, controlled group or a group of businesses under common control and 4) covers a business that uses leased employees. Howev= er, a plan eligible to file an EZ has the option to file electronically using= the Form 5500-SF. In such case, sections of the SF not applicable to the EZ f= iler may be left blank.

Form 8955-SSA:= The Schedule SSA attachment= has been eliminated from the Form 5500 series and replaced by a separate Form 8955-SSA. The SSA and now the 8955-SSA is used to report terminated participants with an unpaid vested balance in the plan to the Social Secu= rity Administration so the Administration can notify these individuals that th= ey may have a retirement benefit in the plan. The 8955-SSA must be filed usi= ng a paper form with the Internal Revenue Service.

Posting Form 5= 500 on the Company Intranet: The Forms 5500 and 5500-SF are public record and can be viewed on= line at the DOL website. However, if a company has an intranet website or other website is used for the purpose of communicating with employees and not t= he public, then the Form 5500 and attachments must be made available for the employees to view on the website. Be aware that Form 8955-SSA and the res= t of the annual reports must not be available on the website as they are not public record and contain private information. The Summary Annual Report = may be posted on your intranet but this is not an acceptable substitute for providing a copy to each participant.

You may wish to refer to the Form instructions for more specific information about the fi= ling requirements.

7-Day Deposit Requirement for Small Plan 401(k) Deferrals

The Department of Labor (DOL) has published a final ru= le to protect employee contributions deposited to 401(k) and other pension p= lans with fewer than 100 participants. The rule provides a safe harbor period of seven business days following receipt or withholding of such contributions by the employer.

Prior to implementation of the new rule, employers of = all sizes were required to transmit employee contributions to 401(k) and other pension plans as soon as they could reasonably be segregated from the gen= eral assets of the employer, but no later than the 15^th business da= y of the month following the month in which contributions are received or with= held by the employer.

The final rule changes the contribution rules to creat= e a safe harbor period under which participant contributions to a small plan = will be deemed to comply with the law if those amounts are deposited with the = plan within seven business days of receipt or withholding by the employer.

This final rule is effective as of January 14, 2010 an= d is substantially the same as the temporary rule that employers have been abl= e to rely on. Please note that the DOL did not expand the safe harbor rule to cover plans with 100 or more participants. So these “large” p= lans must comply with the original rule requiring deposit as soon as soon as possible, but no later than the 15^th business day of the month following the month in which contributions are received or withheld by the employer.

Review of Fiduciary Bonding Requirements

The Internal Revenue Service examination of defined contribution plans with less than $250,000 in assets showed that such pla= ns frequently fail to comply with the fiduciary bonding requirements of the Employment Retirement Income Security Act (ERISA).

ERISA Section 412 specifies that the amount of the bon= d be not less than 10% of the amount of funds handled by the plan, but in no e= vent less than $1,000, nor more than $500,000. The amount of the bond must be fixed at the beginning of each calendar year or other fiscal year which constitutes the reporting year of the plan. Note that the bond may never = be less than $1,000 even if 10% of the amount of funds handled is less than $1,000. The amount of the bond must be no less than 10% of the highest am= ount of funds handled during the preceding plan year.

ERISA does not require that the fidelity bond state a specific dollar amount of coverage providing the bond covers at least 10%= of the funds handled, with minimum coverage of $1,000 for each plan official covered. In the event the amount of funds handled increases during the pl= an year, the bond need not be updated to reflect the increase during the yea= r.

Please note that small plans having non-qualifying ass= ets may wish to maintain a bond at a higher level in order to qualify for the small plan waiver of the independent CPA audit requirement. Qualifying as= sets are basically assets that are held by a regulated financial institution. Non-qualifying assets are everything else, but with a few exceptions such= as employer securities and participant loans. To qualify, the bond must cove= r an amount that is at least equal to the value of the non-qualifying assets h= eld by the plan.

P= acific Retirement Plans, Inc. Provides Full

C= onsulting, Administration & Actuarial Services

·= Profit Sharing & 401(k) Plans	·= Target Benefit Pension Plans
·= Age Based and Comparability Plans	·= Money Purchase Pension Plans
·= Defined Benefit Pension Plans	·= Employee Stock Ownership Plans

216 N. San Mateo Drive<= span style=3D'font-size:8.0pt;mso-bidi-font-size:10.0pt;font-family:Arial'>= ·<= /span>= San Mateo, CA 94401<= o:p>

Phone (650) 696-9600 · Fax (650) 340-1226 · Email PRP@PRPlans.com

V= isit our Website www.prplans.com