3(16) Fiduciary Services Setup Timeline

Thank you for choosing TRA to be your 3(16) Fiduciary! These services are designed to take some of the fiduciary and administrative responsibilities from you as the plan sponsor. Burdensome tasks like approving withdrawals and tracking eligibility are now in the hands of TRA. We send you notifications for when a distribution was approved and a list of upcoming eligible employees. We send out some plan notices on your behalf to participants of the plan.  TRA signs and submits the 5500 on your behalf so you do not have to worry about the deadline. This is great for freeing up some of your time to concentrate more on your business needs.

Phases of Process

  • Phase 1: Engage TRA for 3(16) Fiduciary Services

    During Phase 1 of the setup process, the following actions take place:

    • Implementation Specialist assigned, if the plan is new to TRA
    • Plan will be reviewed to ensure it is structured to support our 3(16) services
      • Plan (investment) provider
      • Payroll provider
      • Plan document specifications
        • Eligibility requirements
        • Entry dates
        • Vesting schedule
      • Plan Sponsor will need to execute the TRA Plan Services and Fee Agreement (PSA)

    The timing of when 3(16) services are started depends on when the implementation specialist receives all the 3(16) data collected. This includes everything listed in phase 2. 3(16) services typically begin on the first of the month after all the data is received. A commencement email is sent out around 15 business days prior to the services starting. Any data received after that may commence the first of the following month after the upcoming one.

  • Phase 2: Data Gathering

    During Phase 2 of the setup process, TRA begins gathering the data needed to provide 3(16) services to your plan. This data is broken down into four basic categories.

    • Item 1: Historical and YTD census
      • We will need a census spreadsheet with historical and Year to Date (YTD) information. This “one time” report will contain historical data such as vested years of service and entry dates, as well as YTD payroll data.
      • The YTD file should include all payroll data from January 1st through the payroll period prior to the 1st payroll submission with your plan provider.
      • You can forward the spreadsheet to us securely by going to PlanSponsorLink at https://plansponsorlink.com/tra401k. This will begin once your deferrals have started with your plan provider.
      • We capture data on all wage earners including Social Security number, date of birth, date of hire, date of termination, compensation, contributions, and hours of service to name a few. This data is used to determine current participant eligibility, calculate years of service for vesting and more.

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      Include link to template file. I can provide the files in email, but don’t know hot to link them. MF

      PlanSponsorLink 

    • Item 2: Terminated Employees with Balances

      If your 401(k) plan existed prior to transitioning services to TRA, we will need this same census data for all previously terminated employee that still have an account balance within the 401(k) plan.

      Insert language here.  What, why and how

    • Item 3: Ongoing Payroll Data

      We need to capture employee census and payroll data on a per payroll basis.  This ongoing data allows TRA to project future participant eligibility and keep vesting calculations updated so that they reflect accurately on participant statements each quarter.  The contact data included on this file allows us to accurately mail any required notices to the participant’s home.

      Spreadsheets should be submitted to us securely by going to PlanSponsorLink. This will begin once your deferrals have started with your plan provider.

      During the setup phase, you may be asked to sign a Plan Provider form, authorizing TRA to sign off on transactions, as a fiduciary. This will reduce your administrative responsibilities and liability. TRA will review, approve and process loan (if applicable) and distribution requests on your behalf.

      Include link to template file

    • Item 4: Fidelity Bond

      A fidelity bond is a type of business insurance.  When applied to a 401(k) plan, this bond protects the employee benefit plan from any losses due to action of employees within the company who are responsible for handling the funds of the plan.  The amount of the bond should not be less than $1,000. A plan is not required to have more than $500,000 in coverage except:

      • Plans that hold employer stock are required to have $1 million dollar bond
      • Plans that hold “non-qualifying assets” such as real estate are required to obtain a bond for 10% of plan assets or 100% of the value of non-qualifying assets

      Don’t worry!  If you provide TRA a copy of your fidelity bond, we will apply the various rules to ensure your plan is bonded at the appropriate level.

      If you don’t currently have a bond, visit Colonial Surety

  • Phase 3: Plan Provider Setup

    During the setup phase, you may be asked to sign a Plan Provider form, authorizing TRA to sign off on transactions, as a fiduciary.  This will reduce your administrative responsibilities and liability.  TRA will review, approve and process loan (if applicable) and distribution requests on your behalf.

    Are there any template forms we could provide links to in this section?

    Is there any specific timing we should be mentioning here as a summary before moving to the next phase?

  • Phase 4: TRA System Setup

    In this phase, TRA will set up the systems we use for 3(16) administration. This includes establishing plan specifications in our systems as well as loading the data collected so far.

    We will establish the plan specifications in our system based on the terms of your plan document. Your plan documents will need to be finalized and executed before these system set ups can be completed.

    We will also be loading the historical data, YTD data and initial payroll file we collected under item number 2 above.

    • Historical data – prior plan entry date and vesting year of service. This data is needed to establish eligibility and vesting status.
    • Year-to-date – YTD payroll and census information. This data is needed to establish a full participant listing as well as populate the current year’s payroll data.
    • Payroll data – first individual ongoing payroll file following receipt of YTD payroll data. This is needed to establish the format and frequency in which payroll data will be received on an ongoing basis.

    Once all of these things are established in our systems, we will be ready to begin providing 3(16) services for your plan.

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    Is there any specific timing we should be mentioning here as a summary before moving to the next phase?

  • Phase 5: Commencement

    In this final phase, TRA will notify the plan sponsor that the 3(16) Fiduciary Services are ready to commence.

    What can the client expect? You will receive an email notifying you that this service has begun. In the coming days, your Client Relationship manager will reach out to you and provide additional information to ensure the plan is operating smoothly. We will provide a breakdown of who, what, when, where information to you to better outline specific processes relating to the 3(16) portions of your plan.

    Should we be providing information at this stage on where to send distribution/loan request forms? No, CRM can provide this during the intro call/email.

    Should we be setting any other service expectations on how and where to reach out for certain items? No, this can be provided during the intro call/email.

    Is there any specific timing we should be mentioning here as a summary before bringing this to a close?

    Timing is incredibly important when it comes to 3(16). The next few items will display specific timing when it comes to administering your plan.

    • Payroll files: If you are submitting per pay period files to TRA, they will need to be submitted within 5 business days of the check date. This is to ensure we can accurately project eligibility and vesting.
    • Year end Data: This will need to be submitted as soon as possible. Notifications usually go out in January of the following plan year. It is imperative the data requested is returned as soon as possible so we can calculate an Employer funded deposits like, profit share, Safe Harbor, or Employer match. This data is also needed timely in the even that any refunds are due, the IRS deadlines dictate our timeline for this and we want to ensure no additional costs or penalties are applied. The sooner the data is received the quicker we can file all IRS Forms by the deadline.
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