These plans may include the following:
The Employer is required to perform annual nondiscrimination testing at the end of each plan year. It is highly recommended that Employers also perform Predictive and Mid-Year testing to reduce the risk of a testing failure.
The e-file is due 7 months following the end of the plan year.
Please read these Notes carefully based on your answers.
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ADDITIONAL NOTES:
Must distribute to:
When to Distribute?
POTENTIAL PENALTY:
There is a potential compliance risk with a wrap document due to the fact that you are required to provide wrap documents to participants within 90 days of participation to comply with ERISA: otherwise, you could have a penalty liability. Failure to furnish plan documents to the DOL upon request can cause a penalty of $159/day (but no greater than $1,594 per request).
POTENTIAL PENALTY:
The potential penalties can include salary reductions or other benefits of the plan provided to highly compensated employees or key employees to be taxable.
ADDITIONAL NOTES:
A Premium Only Plan (POP) is the simplest form of a Section 125 cafeteria plan. A POP does not include language specific to Group Term Life, HSA or Self-Funded plans. If needed, please go with the Section 125 plan document instead of the POP.
POTENTIAL PENALTY:
The potential penalties can include salary reductions or other benefits of the plan provided to highly compensated employees or key employees to be taxable.
ADDITIONAL NOTES:
A separate annual report (i.e. Form 5500) is required for each plan. However, a plan sponsor could combine all of its employee benefit arrangements into one plan utilizing a wrap plan and it would then report all of those arrangements under one Form 5500.
Plan Types that are required to file a Form 5500:
POTENTIAL PENALTY:
The IRS penalty for late filing of a 5500 series return is $50 per day. The DOL penalty for non-filers (those who have never filed) is between $300 per day and can run up to $2,233 as of January 2020. These penalties can be reduced significantly to as little as $2,000 for one plan for one year or $4,000 cap per plan for one year if the Employer files late under the delinquent filer voluntary compliance program (DFVCP).
ADDITIONAL NOTES:
When determining ALE status, consider the entire controlled group of employers. For example, Employers A, B, and C are part of a controlled group because they have a common ownership. Employer A has 15 Full-Time equivalent employees, B has 30, and C has 20. Individually, these are small employers, however, collectively, they are an ALE, and all three employers must file 1094/1095-C forms.
POTENTIAL PENALTY:
There are multiple penalties regarding Affordable Care Act (ACA) reporting: