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Compliance Testing User Guide

Table of Contents

I. General Testing Information II. Completing and Uploading Census Information

a. Census Submission Checklist b. How to Obtain the Compliance Data Summary Report c. How to Obtain a Census File d. Sample Census e. Explanation of Census Data f. Compensation Q & A g. Helpful Hints for Census File Setup h. Excel Tips i. Census Troubleshooting j. Census Upload Q & A

III. Census Upload Errors and Warnings IV. Entering Ownership Information V. Completing the Year-End Questionnaire

VI. Explanation of ADP/ACP Leveling Method for Corrections VII. On-Demand Compliance Testing VIII. Complete User Guide

General Testing Information Rev. 11/7/2019

General Testing Information

IRC §401(k)(3)—Actual Deferral Percentage Test (ADP) and/or IRC §401(m)(2)—Actual Contribution Percentage Test (ACP) To pass either the ADP or ACP test one of two tests must be met:

Basic Test: the average deferral/contribution percentage of the highly compensated employee (HCE) group must not exceed 125% of the average deferral/contribution percentage of the non-highly compensated employee (NHCE) group

Alternative Test: the average deferral/contribution percentage of the HCE group must not exceed the average deferral/contribution percentage of the NHCE group by the lesser of 2 plus or 2 times the ADP or ACP of the NHCEs

IRS regulations allow the use of either prior year or current year testing methods which is outlined in the plan document. Under both the prior and current year testing methods, the ADP or ACP for the HCEs is always determined using data from the plan year being tested. If the current year method is used, the ADP or ACP for the NHCEs is also determined using data from the plan year being tested. However, if the prior year test method is used, the ADP or ACP for the NHCEs is determined using data from the preceding plan year. A number of restrictions apply in order to switch between these methods. IRC §401(a)(17)—Compensation Limits This provision applies an annual compensation limit to each employee who participates in a qualified plan. The compensation limit is applied when calculating a participant’s contributions for the plan year (i.e. deferrals, employer non-elective or match contributions) and in nondiscrimination testing. The dollar limit is effective January 1 and is applied in the calendar year in which the plan year begins. For 2019 the compensation limit is $280,000. IRC §402(g)—Limitation on Elective Deferrals For 2019, the IRS limit on participant contributions is $19,000 If there are 402(g) violations, excess deferrals and any income accrued must be returned to the participant by April 15 following the year of excess deferral. If distributed by April 15, the excess deferral is taxable to the participant in the year the deferral was made with income attributable to the excess deferral being taxable in the year distributed. IRC §410(b)—Minimum Coverage In order to maintain its qualified status, a plan must benefit a minimum percentage of eligible NHCEs. Each component of the plan (employee deferrals, employer matching contributions, and employer non-elective contributions) must pass the coverage test. The Ratio Percentage Test requires that a plan benefit a percentage of NHCEs equal to 70% or more of the percentage of HCEs who benefit under the plan. The plan’s coverage ratio is determined by dividing the ratio of benefiting NHCEs by the ratio of benefiting HCEs. If the plan fails the ratio percentage test, it may still pass under a more rigorous testing procedure called the Average Benefit Test. Generally, employees who are not counted for purposes of this test are: employees who have not met the minimum age and service requirements of the plan, employees who are covered by a collective bargaining agreement (union employees), certain non-resident aliens with no U.S. source income, and if the plan provides, those who have worked less than 500 hours and are not employed on the last day of the plan year. IRC §414(q)—Highly Compensated Employee Definition An employee will be considered to be a highly compensated employee (HCE) if he/she meets any of the following:

the employee owned more than 5% of the Employer at any time during the current plan year or during the 12 months preceding the plan year

an employee who is a lineal ascendant, descendant, or spouse* (i.e. spouse*, children, parents or grandparents) of a more than 5% owner is treated as owning the same interest and is an HCE. *Effective September 16, 2013 under the Defense of Marriage Act (DOMA), the term spouse includes same-sex couples legally married in any state or foreign jurisdiction that recognizes such marriages regardless of state they currently reside.

the employee had compensation in excess of $120,000* during the 12 months preceding the plan year and, if elected by the employer, he/she was in the top 20% of employees ranked by compensation for the 12 months preceding the plan year. *The Highly Compensated Threshold amount is indexed – lookback year amounts should be carefully reviewed as amounts may differ each plan year.


IRC §414(s)—Compensation Ratio Test If a plan excludes certain forms of compensation (such as bonuses, commissions, or overtime) this test must be performed. It requires that the average of the ratio of plan compensation to total compensation for the HCE group be not more than a deminimus amount higher than the average of the ratio of plan compensation to total compensation for the NHCE group. Some within IRS have unofficially indicated 3% or less as a standard, but each plan is viewed on a facts and circumstances basis. IRC §414(v)—Catch-up Contributions If elected in the plan document, any participant age 50 or older will be able to make annual catch-up contributions in addition to their normal elective deferrals. The catch-up limit in effect for 2019 is $6,000. A contribution is considered a catch-up contribution when it exceeds one of the following three limitations:

Statutory Limit: A participant’s elective deferrals may be limited by the Statutory Limits, which include the Elective Deferral Limitation under IRC §402(g) and the Annual Additions Limit under IRC §415. Consider the XYZ Company 401(k) Plan, which has a plan year end of December 31, 2019. Employee X defers $25,000 during the year; therefore, $6,000 is in excess of the §402(g) limit. Since Employee X is over 50 years of age, $6,000 will be treated as a catch-up contribution, if permitted by the plan.

Employer-Provided Limit: A plan may contain a provision that restricts the amount of elective deferrals an employee is able to contribute. If an individual exceeds this limit and is eligible for catch-up contributions, the amount exceeding the plan limit will be categorized as such, as long as it does not exceed the the Catch-up Limit for the year. For example, the XYZ company 401(k) Plan imposes a 15% limit on the amount of employee deferrals. Employee Y has compensation of $35,000 and total deferrals of $6,125 which is 17.5% of his pay for the year. At the end of the plan year, it is determined that the individual exceeded the plan-imposed limit of 15% by 2.5%, which equates to $875. The $875 would be considered a catch-up contribution since Employee Y is 50 years old.

Actual Deferral Percentage (ADP) Limit: An Actual Deferral Percentage (ADP) Limit is imposed on 401(k) plans. The Actual Deferral Ratio (ADR) for a participant is calculated without regard to the amount that may be considered for catch-up due to the Statutory Limit and/or the Employer-Provided Limit. If a plan fails the ADP test, the amount to be refunded to catch-up eligible participants is first offset by the amount of the Applicable Dollar Catch-up Limit. The catch-up amount due to Actual Deferral Percentage (ADP) Limit is calculated after the ADP test has been performed; all amounts eligible for disbursement under §401(k)(8) or 408(k)(6)(C) must be re-categorized as catch-up contributions, up to the Applicable Dollar Catch-up Limit.

IRC §415—Maximum Annual Additions Under IRC §415(c), the annual additions that are credited to the participant’s account for 2019 may not exceed the lesser of $56,000 or 100% of the participant’s §415 compensation. Annual additions include, but are not limited to, employer contributions, forfeitures that are reallocated to the participants, and employee contributions to all plans. IRC §416(i)(1)(a)—Key Employee Definition Under IRC §416(i)(l)(a) a key employee is any employee who at any time during the current plan year is:

a greater than 5% owner of the employer a greater than 1% owner of the employer and earning annual compensation from the employer in excess of

$150,000 an officer of the company receiving compensation in excess of $180,000 (for 2019)

IRC §416—Top Heavy Test The plan may be considered top heavy for the next plan year if the account balances of key employees are more than 60% of the account balances of all employees as of the last day of the current plan year. If the plan is top heavy for a given plan year, the employer must make a minimum contribution to the accounts of all non-key employees. Generally the minimum is 3% of each non-key employee’s compensation or if less, the highest rate of contribution made by or on behalf of any key employee. Non-key employees are entitled to receive this contribution if they are employed on the last day of the plan year regardless of the number of hours worked during the plan year. Account values attributable to employer contributions must also be vested according to an IRS approved top-heavy vesting schedule.


IRS LIMITS

Code Section

2020

2019

2018

2017

2016

2015

2014

IRC §401(a)(17)– Compensation Limits

$285,000

$280,000

$275,000

$270,000

$265,000

$265,000

$260,000

IRC §402(g) – Limitation of Elective Deferrals

$19,500

$19,000

$18,500

$18,000

$18,000

$18,000

$17,500

IRC §414(q) – Highly Compensated Employee*

$130,000

$125,000

$120,000

$120,000

$120,000

$120,000

$115,000

IRC §414(v) – Catch Up Contributions

$6,500

$6,000

$6,000

$6,000

$6,000

$6,000

$5,500

IRC §415 Maximum Annual Additions

$57,000

$56,000

$55,000

$54,000

$53,000

$53,000

$52,000

IRC §416(i)(l)(a) – Key Employee (Officer Comp Limit)

$185,000

$180,000

$175,000

$175,000

$170,000

$170,000

$170,000

Social Security Taxable Wage Base

$137,700

$132,900

$128,400

$127,200

$118,500

$118,500

$117,000

*The compensation used to determine highly compensated employees (HCE) is the compensation made in the twelve months prior to the plan year being tested. For example, if you are testing a 1/1/2019 to 12/31/2019 plan year you would look to see if anyone made greater than $120,000 from 1/1/2018 to 12/31/2018.

Completing and Uploading the Census Information Rev. 12/03/2014

Completing and Uploading Census Information If you have a question regarding the specific census information being requested, or are questioning how a particular column needs to be formatted, please view the Sample Census and Explanation of Census Data. If you have not completed the census and would like to download a current census, created from the payroll files remitted throughout the year, you may do so through the “Reports” feature on the main tool bar. If you have not submitted the final payroll, then please see the How to Obtain the Compliance Data Summary Report for complete instructions on obtaining this file. If the final payroll has been submitted, then please see the How to Obtain a Census File for complete instructions on obtaining this file. It is important that ALL employees who received compensation during the plan year are included on the year-end census regardless of whether they are eligible or participate in the plan. To Upload the Census, please follow the instructions below:

From the ‘Compliance Services’ page on PSC, choose “Pending” under “Census” heading for the current plan year end.

You may either click on the “Browse” button to select the census file you have created or type in the file path in the space provided (i.e., c:\census.txt). Once the path is entered, select “Upload File”.

The web site will check the data for reasonableness.

If you receive a page titled “Errors and/or Warnings”, corrections must be made to the file or assumptions must be accepted before the census will be successfully uploaded. Refer to the Errors and Warnings section for additional information. The Helpful Hints for Setting up Your File page details what is required and what assumptions will be made. Once the necessary corrections have been made to the census file, click on “Upload File” to re-submit the census.

Once the census file is cleared of all errors and/or warnings it is ready to be submitted to Compliance Services for testing. You will have three options:

“Compliance Services Only”. This will allow you to submit data that will only be used for testing and will not update any records on the recordkeeping system.

“For Compliance and Recordkeeping Services”. If this option is selected the recordkeeping system will be updated with the census data for employees who are currently on our system. The following information will be updated:

o Eligibility Status – if provided on the census file it will update the excluded class code under the employees’ information.

o Date of Birth

o Date of Hire, Date of Termination and Date of Rehire – will only update on the recordkeeping system if the date logic makes sense to what is currently stored.

o Hours – the census data will update the system only if the plan is set up to accept year-to-date hours and vesting services are provided.

o Pre-Entry Compensation

o Plan Compensation

o Total Compensation

o Prior Year Compensation

o Officers

It is important to know that if you do not make these changes to the payroll submissions, the information may be overwritten with your next payroll upload.

“No, Continue Working”. This option will allow you to make additional corrections to the census file before selecting one of the other two options.

Completing and Uploading the Census Information Rev. 12/03/2014

After selecting either “For Compliance Services Only” or “For Compliance and Recordkeeping Services”, you will return to the ‘Compliance Services’ page and a completion date will appear under the status for the Census. Once the “complete” date is showing you will need to contact your Compliance Analyst if changes need to be made. If you are having difficulties using Excel, please see Excel Tips for helpful information. If you are having difficulties uploading the census, please see Census Troubleshooting for more information.

Census Submission Checklist Rev. 11/7/2019

Census Submission Checklist

This checklist is designed to assist you in preparing the year-end data and to ensure that you complete the necessary steps required for the annual administration of the plan. You do not need to return this form; it is for your reference only. Create/Input census data onto spreadsheet

To view a sample census and for specific instructions on how to create the census spreadsheet, please click on the “Video Demonstration” link and/or the “Compliance User Guide” link located on the “Compliance Services” page. Note: the compliance user guide links do not work in Google Chrome. Please ensure the information you are providing is applicable to your current plan year.

Save the census spreadsheet as a Text (Tab Delimited)(*.txt) file. In Microsoft Excel, from the menu, select “File”, “Save as”, and then select “Text (Tab Delimited)(*.txt)” from the “Save as type” drop down menu box, located at the bottom of the “Save as” window.

Please Note: If the plan has multiple divisions or payroll centers, you will need access to all divisions/centers in order to complete the following items. All divisions and payroll centers need to be combined into one census file for uploading. Multiple census files cannot be uploaded. If you receive a message stating you do not have divisional access, please contact Plan Services Website Support. Enter Ownership Information

You may obtain additional information about completing this item by clicking on the “Video Demonstration” link and/or the “Compliance User Guide” link located on the “Compliance Services” page.

From the “Compliance Services” page, click on “Pending” under “Ownership” for the current plan year.

You will need to provide all employee owners (those owning more than ½%), their percentage of ownership (include full ownership percentages up to two decimal places without rounding) and their employed family members. We will only need spouse*, child, parent, grandparent and legally adopted children/stepchildren. *Effective September 16, 2013 under the Defense of Marriage Act (DOMA), the term spouse includes same-sex couples legally married in any state or foreign jurisdiction that recognizes such marriages regardless of state they currently reside.

Once you have completed the ownership information, you will be taken back to the “Compliance Services” page and a completion date will appear under the status for ownership.

Upload Census


From the “Compliance Services” page, choose “Pending” under “Census” for the current plan year.

Clear any census file validation errors and/or warnings.

After you have selected either “For Compliance Services Only” or “For Compliance and Recordkeeping Services”, you will return to the “Compliance Services” page and a completion date will appear under the status for the Census.

Complete the Year-End Questionnaire


From the “Compliance Services” page, click on “Pending” under “Questionnaire” for the current plan year.

Once you have responded to the final question, you will be taken back to the “Compliance Services” page and completion date will appear under status for the “Questionnaire”. The Questionnaire is not considered complete unless all of the questions have been answered and the status for the Questionnaire shows “Complete”.

How to Obtain the Compliance Data Summary Report Rev. 10/23/2017

How to Obtain the Compliance Data Summary Report In an effort to streamline the year-end process, you have the opportunity to request a report that reviews the data that has been uploaded for the current plan year end. This report will identify any issues that may need to be corrected either in future payroll uploads or in the final year-end census submitted to Compliance Services. Review of this report is not mandatory; it is merely a tool that you may find helpful in preparing the required year-end Compliance data for the plan. If you have any questions about this process, please contact Plan Services Website Support. Requesting a Preliminary Error Report (Prior to submitting the final payroll)

From the main toolbar, click on the “Reports” tab and select “Standard Reports”.

Click the “Participant/Employee Data” tab within the Reports section.

Click the “Compliance Data Error/Warning Summary” link.

Follow the system prompts and make certain that you select the current plan year-end.

Select “Yes” to receive an email notifying you that your report is ready to view and/or download. This e-mail will also include a reference number that you will need in order to retrieve the file.

Verify the e-mail address, select “Text” for the Report Type and click “Continue”.

You will receive an e-mail when the report is ready.

To retrieve the report, log back onto the Plan Service Center (PSC).

From the main toolbar, click on the “Reports” tab and select “My Reports”.

Locate the report you just ordered and click “View” off to the right. The file will be displayed on the screen.

To save the file, please click “Edit” then choose “Select All”. The final step is to choose “File” and “Save As”, type in the file path to save to your computer, then click “Save”.

Once you have received the report, please review it for any outstanding issues. You can make any necessary changes to the payroll file prior to uploading the final payroll.

If you do not make any changes to the payroll file, you will have to correct this information prior to uploading the year-end census file into the PSC.

Reminder: If you are unable to correct the discrepancies on the payroll file you will still be able to make changes to the census information via the PSC.

How to Obtain a Census File Rev. 10/23/2017

How to Obtain a Census File

In an effort to streamline the year-end process, you can obtain a census file that is pre-formatted in lieu of creating a census file from the payroll records. You will need to wait until after you have remitted the final payroll file for the year before requesting a census file. Please note, if the company has multiple divisions, the individual requesting the report must be set up with a user ID that has access to ALL divisions on our system. If you have any questions about this process, please contact Plan Services Website Support. Requesting a Census File (After submitting your final Payroll Upload)

From the main toolbar, click the “Reports” tab and select “Standard Reports”.

Click the “Participant/Employee Data” tab within the Reports section.

Select the correct Plan Year Begin date and Plan Year End date for the current plan year.

If you would like the census file to include Header Labels select “Yes” from the drop down menu. Please note, prior to uploading the census file to the Compliance tab you will need to delete the Header Label row.

Under Report Settings, select “Yes” to receive an email notifying you that the report is ready to view and/or download. This e-mail will also include a reference number that you will need in order to retrieve the file.

Verify the e-mail address, select “Text” for the Report Type and click “Continue”.

You will receive an e-mail when the report is ready.

To retrieve the report, log back onto the Plan Service Center (PSC).

From the main toolbar, click on the “Reports” tab and select “My Reports”.

Locate the report you just ordered and click “View” off to the right. The file will display on the screen.

To save the file, please click “Edit” then choose “Select All”. The final step is to choose “File” and “Save As”, type in the file path to save to your computer, then click “Save”. This will save the file in a .txt file.

Once you have saved the census file, you need to review it for completeness and accuracy. The Explanation of Census Data provides the headings for each column and explains in detail the required information.

The file can be opened and manipulated using Microsoft Excel. Prior to uploading the file, ensure the file is re-saved in Text (Tab Delimited)(*.txt)format.

It is important to note that ALL employees are to be included on the year-end census regardless of whether they are participating in the plan or not. If ALL employees are not provided on the payroll files you will need to add the additional employees prior to uploading the census files.

Once you have made all necessary corrections to the file, upload this information on to the Compliance tab of the PSC. Please refer to the “Video Demonstration” link and/or the “Compliance User Guide” link located on the ‘Compliance Services’ page for instructions on uploading the file.

Note: It is imperative that all data uploaded via the Compliance tab on PSC is accurate as this information will be used for year-end services. If we are required to revise any non-discrimination testing or the IRS Form 5500 filing due to submission of incorrect data, additional Compliance fees may apply.

Sample Census Rev. 11/02/2016

Sample Census

All columns are required to be on the file, even if they do not apply to the plan.

Column A – Employee Name (Last Name, First Name)

Column B – Employee Status

Column C – Social Security Number

Column D – Date of Birth (“MM/DD/YYYY”)

Column E – Hours Worked Column F – Original Date of Hire (“MM/DD/YYYY”) Column G – Date of Termination (“MM/DD/YYYY”) Column H – Date of Rehire (“MM/DD/YYYY”) Column I – Pre-Entry Compensation Column J – Plan Compensation Column K – Total Compensation Column L – Prior 12 Months Compensation Column M – Employee Deferrals Column N – Employer Matching Contributions Column O – Employee After Tax Contributions Column P – Employer Non-Elective Contributions Column Q – Employee Roth Contributions Column R – Officers (Y or N)

Explanation of Census Date Rev. 11/7/2019

Explanation of Census Data

1. Employee Name Column A Please provide the name of anyone employed at any time during the plan year in the following format: LAST, FIRST. This should include all employees, even employees that are not eligible or not participating in the plan. Assumptions: We will assume that the census provided contains ALL employees who were employed during the plan year.

2. Employee Status Column B If applicable, indicate one of the following employee status codes: D, E, I, L, M, N, P, R, S, T, U, or X. If none of these codes apply then leave Column B blank. D = death I = disabled L = leased employees M = military leave* N = non-resident alien with no U.S. income R = retired within the current plan year S = age/service requirement never met for initial eligibility purposes T = terminated in a prior plan year, with compensation in the current plan year that is to be included in compensation for testing (see note concerning the treatment of severance pay for 415 purposes under item #11, Total Compensation). For example, census data is for the 1/1/2019 – 12/31/2019 plan year. Anyone who terminated prior to 2019 that should be included in the 2019 testing should be reported with a “T” status code. U = union/collectively bargained employees The following codes should only be used when the plan document provision has been selected: E = excluded from the plan due to:

401(k) and Profit Sharing plans - non-participating employer of a Controlled Group or Affiliated Service Group 403b plans - students as defined under IRC §3121(b)(10) and/or employees participating in another 403b plan of the

employer P = excluded from the plan due to:

401(k) and Profit Sharing plans - part-time/temporary/seasonal employees 403b plans - employees who are normally scheduled to work less than 20 hours per week

X = member of an excluded class of employees as defined in the plan document Why we need this information: This information is needed to accurately determine eligibility for the plan and to allocate any applicable employer contributions. *Please be sure to indicate any employee who has been on military leave. If any employee is in the process of making up missed contributions due to military leave, please be sure that you are only providing us the contributions for the current plan year and do not include make up contributions. We may need to contact you for additional information regarding these employees. Assumptions: If this information is not provided with the appropriate categories listed above, or is invalid based on historical information provided, we will make the most conservative assumption which is that an employee is NOT excludable under any of the above categories. Please Note: If there are any employees who fall into multiple status codes during the plan year, or who are members of a particular group for only a portion of the plan year, it is essential that you notify your Compliance Analyst of this situation. For example, if an


employee was a member of a union for only six months of your plan year, you would need to provide this information to your analyst to ensure testing is completed correctly. 3. Social Security Number Column C Please provide in the following format with the hyphenation: xxx-xx-xxxx Assumptions: Assumptions will not be made.

4. Date of Birth Column D Please provide in the following format: “MM/DD/YYYY” Why we need this information: Birth dates are used to determine if an employee has met the age requirement and is eligible to participate in the plan. Assumptions: If we do not receive this information or if we receive conflicting information, we will use the most conservative approach, which is to assume a date of birth that would make the individual meet the age requirement of the plan. If the date of birth for any employee is not provided, we will assume a 01/01/1980 date of birth. Under this assumption, an employee would not be eligible for any applicable age 50 catch-up contributions.

5. Hours Worked Column E This is the actual number of hours an employee was credited with during the plan year. If the plan uses the equivalency method, please provide the calculated equivalent number of hours. Please cap hours at 3,000. Why we need this information: This will be used to calculate a year of service for the current plan year’s eligibility and/or vesting requirements. If your plan has an hours requirement to receive an employer allocation this information is required. We will use this information to determine who is eligible to receive this contribution.

Assumptions: If hours are not provided, we will prorate employee hours based on their hire date.

6. Original Date of Hire Column F Please provide in the following format: “MM/DD/YYYY”. The date of hire should be the employee’s ORIGINAL hire date. See the section below entitled “Date of Re-hire” for additional information on subsequent hire dates. Why we need this information: Hire dates are used to determine if an employee has met the service requirement and is eligible to participate in the plan. Assumptions: Assumptions will not be made. Please Note: If the plan was involved in a merger or acquisition and in the plan document it recognizes service credited with a predecessor employer, please be sure to provide the original hire date with the previous employer.

7. Date of Termination Column G Please provide in the following format: “MM/DD/YYYY”. Transferring from one division to another is not considered a termination. If an employee has multiple dates of termination and re-hire, (1) provide original hire date, and most recent termination date and subsequent rehire date on census, (2) please e-mail additional termination/rehire dates in an electronic spreadsheet to your compliance analyst. (If the most recent employment activity is a termination of employment a re-hire


date should not be provided on the census.) This information must be provided within 48 hours of your census being successfully uploaded. Why we need this information: Termination dates are used to determine eligibility for non-discrimination testing, allocation purposes, and for IRS Form 5500 preparation. Assumptions: If an employee on the census does not have a date of termination and does not have compensation or contributions for the plan year being tested, we will assume that the employee terminated during a prior plan year. However, if our records or the census indicate that an employee had contributions and/or compensation during the plan year, we will include the employee in the tests.

8. Date of Re-hire Column H Please provide in the following format: “MM/DD/YYYY”. Please be sure to include the original hire date and original termination date. Indicate an “S” in the status Column B if the initial eligibility requirements have never been met. If an employee has multiple dates of termination and re-hire, (1) provide original hire date, and most recent termination date and subsequent rehire date on census, (2) please e-mail additional termination/rehire dates in an electronic spreadsheet to your compliance analyst. (If the most recent employment activity is a termination of employment a re-hire date should not be provided on the census.) This information must be provided within 48 hours of your census being successfully uploaded. Why we need this information: These dates are used to determine if an employee has met the service requirement and is eligible to participate in the plan. Assumptions: Assumptions will not be made.

9. Pre-entry Compensation Column I Pre-entry Compensation is compensation for any employee who becomes eligible to participate in the plan during the current plan year. The compensation earned from the date of hire or beginning of the plan year, whichever is later, to his or her entry date is considered Pre-entry Compensation. For example, based on a plan year that is a calendar year, if an employee is eligible to enter the plan on July 1, Pre-entry Compensation would be the amount earned from January 1 through June 30. This compensation should be net of any amounts that are defined in your document as excluded, such as bonuses, commissions or overtime. Please review the following examples for further clarification: A plan has a December 31, 2019 plan year end with entry dates of January 1 and July 1. A participant is eligible to enter the plan on July 1. From the period of January 1, 2019, through June 30, 2019, the participant made $45,000. From the period of July 1, 2019 through December 31, 2019, the participant earned $55,000 for a total of $100,000 for the plan year. The census should be completed as listed below: Column I = 45,000 Column J = 100,000 Column K = 100,000 Using the same criteria from above, presume this employee had Excluded Compensation during the year of $10,000. Of this amount, $5,000 was earned before July 1, 2019 and $5,000 was earned after the entry date. You would complete the census as follows: Column I = 40,000 Column J = 90,000 Column K = 100,000 Column I, Pre-entry Compensation, must have a numeric value in it even if it is 0.00.


Why we need this information: Based on the plan’s provisions, Pre-entry Compensation may be excluded in allocating employer contributions and can be used in testing to produce more favorable results. Assumptions: If Pre-entry Compensation is required under the Plan Document, no assumptions will be made. If the plan has a short plan year (less than 12 months) or has dual eligibility requirements, this may result in more than one computation for Pre-entry Compensation. Please contact your Compliance Analyst prior to completing this column.

10. Plan Compensation Column J Plan Compensation is Total Compensation (as defined in item #11) less any amounts that are defined in the Plan Document as excluded, such as bonuses, commissions, or overtime. Pre-entry Compensation should not be subtracted from this compensation amount. If the Plan Document does NOT define any exclusion from compensation, Plan Compensation will equal Total Compensation as illustrated in the Sample Census. Why we need this information: If the document allows for Excluded Compensation, there may be additional tests that must be completed. Assumptions: If Plan Compensation equals Total Compensation, we will assume employees did not have any Excluded Compensation for the year. If the plan has a short plan year (less than 12 months) please contact your Compliance Analyst prior to completing the Plan Compensation column.

11. Total Compensation Column K The plan document provides for one of the following definitions of Total Compensation: W-2 Wages: This amount generally encompasses all amounts included in income which are received for the provision of services to the employer and includes taxable group term life insurance. §3401(a) (Withholding Wages): This amount generally includes all income subject to income tax withholding which are received for the provision of services to the employer. Taxable group term life insurance is excluded. §415 Compensation: All amounts paid for personal services which are includible in gross income regardless of form of payment, including tips, taxable fringe benefits, and taxable group term life insurance. Please note: a number of statutory changes to section 415(c)(3) took place in 2007 that effect the definition of severance pay, and take into consideration when severance is paid to the terminated participant as to whether or not it is included in reportable compensation for the plan year. If you have participants who received any form of severance pay or trailing compensation, and you are unsure if the amount should be included as reportable income, please review the Amendment for the Final 415 Regulations that is included with the Plan Document to determine if those payments need to be included in Total Compensation on the census. It is important to refer back to the Plan Document for further clarification on the compensation selected for the plan. You will also need to ensure that the amount includes or excludes employee deferrals as defined by the plan. Why we need this information: We need Total Compensation for each employee to properly calculate the testing results and to determine the Key Employees for the plan year.


Assumptions: If we are not provided compensation for an employee that we show has made contributions for the plan year, we will include the employee in the tests. If an employee does not have compensation, contributions or hours listed for the plan year being tested, we will assume that the employee terminated during the prior plan year. If the plan has a short plan year (less than 12 months) please contact your Compliance Analyst prior to completing the Total Compensation column. 12. Prior 12 Months’ Compensation Column L This is the TOTAL compensation received during the 12 months immediately preceding the plan year beginning date. This data only needs to be provided for those employees who had earnings in excess of the highly compensation limit during the preceding 12 months. Please refer to the third page of the ‘General Testing Information’ section of the Compliance Testing User Guide for the applicable IRC §414(q) highly compensation limit. Why we need this information: This information is necessary to determine the Highly Compensated Employees. We will need this information if the previous plan year was a short plan year or if this is the first year we are providing compliance services for your plan. Assumptions we will make if we do not receive this information: If this information is not provided for employees, we will use the prior year’s census for this information.

13. Employee Deferrals (if applicable) Column M This is the total amount of employee pre-tax contributions made to the plan through payroll deduction for the current plan year. If any employee is in the process of making up missed contributions due to military leave, please be sure that you are only providing us the contributions for the current plan year and do not include make up contributions. Why we need this information: This information is used to complete testing. Assumptions: If plan assets transferred to us during the plan year, we cannot make assumptions. For all other plans, if we do not receive this information, we will use the employee deferral amounts that were contributed for the plan year.

14. Employer Matching Contributions (if applicable) Column N This is the total amount that the company matches based on employee contributions for the current plan year. If any employee is in the process of making up missed contributions, please be sure that you are only providing us the contributions for the current plan year and do not include make up contributions. Why we need this information: This information is used to complete testing. Assumptions: If plan assets transferred to us during the plan year, we cannot make assumptions. For all other plans, if we do not receive this information, we will use the employer match amounts that were contributed for the plan year unless you have requested that we calculate the employer matching contribution.

15. Employee After-tax Contributions (if applicable) Column O This is the total amount of employee after-tax contributions made to the plan through payroll deduction for the current plan year. Why we need this information: This information is used to complete testing.


Assumptions: If plan assets transferred to us during the plan year, we cannot make assumptions. For all other plans, if we do not receive this information, we will use the employee after-tax amounts that were contributed for the plan year. 16. Employer Non-elective Contributions (if applicable) Column P Employer contributions, other than matching, made to the plan for the current plan year. Why we need this information: This information is used to complete testing. Assumptions: If plan assets transferred to us during the plan year, we cannot make assumptions. For all other plans, if we do not receive this information, we will use the non-elective contributions that were contributed for the plan year unless you have requested that we calculate the employer non-elective contribution.

17. Employee Roth Contributions (if applicable) Column Q This is the total amount of employee Roth contributions made to the plan through payroll deduction for the current plan year. Why we need this information: This information is used to complete testing. Assumptions: If plan assets transferred to us during the plan year, we cannot make assumptions. For all other plans, if we do not receive this information, we will reflect the amounts that were contributed for the plan year as employee Roth contributions.

18. Officers Column R Please indicate which employees were Corporate Officers at any time during the current plan year by putting a “Y” in this column. All other employees must have an “N”.

Why we need this information: This is needed to determine the Key Employees. Assumptions we will make if we do not receive this information: Assumptions will not be made.

If any assumptions detailed in this explanation are used

and result in the need for revised testing, additional fees may apply.

Compensation Q & A Rev. 11/8/2019

Compensation Q & A

The information provided in this Q & A should only be used as general guidance. Please consult your legal counsel or tax advisor for specific information. This information is not intended to provide legal or tax advice and all comments contained herein are solely our interpretation. Please refer to the plan document to determine which type of compensation should be reported on the year-end census. Why doesn't my PSC census bring in compensation? The census information comes from the information that is provided on your payroll file. If the payroll files do not include compensation amounts then the census downloaded from PSC will not include compensation amounts. If compensation is provided on the payroll files, the system needs to be set up to read and capture the amounts being provided. Please contact Plan Services and select Website Support for assistance with having this set up. Final compensation paid for 2018 was not paid until 2019. Does this compensation need to be reported on the 2018 or 2019 census? In general the census should include all compensation and contributions that had a pay period end date within the plan year that is being tested. You will want to ensure that the compensation pay periods included in the census from year to year are reported on a consistent basis and that no compensation is included in more than one plan year. What is Pre-entry Compensation? Pre-entry Compensation is compensation for any employee who becomes eligible to participate in the plan during the current plan year. The compensation earned from the date of hire or beginning of the plan year, whichever is later, to his or her entry date is considered Pre-entry Compensation. Please see the Explanation of Census Data for examples. Can I leave out Pre-entry Compensation if you are not calculating a contribution for us this year? Yes, however, the Pre-entry Compensation column must have a numeric value in it even if it is 0.00. Also, please note that Pre-entry Compensation can produce a more favorable test result. What's the difference between Plan Compensation and Total Compensation? It is important to refer back to the Plan Document for further clarification on the compensation selected for the plan. You will also need to ensure that the amount includes or excludes employee deferrals as defined by the plan. Plan Compensation is Total Compensation less any amounts that are defined in the Plan Document as excluded, such as bonuses, commissions, or overtime. If the Plan Document does NOT define any exclusion from compensation, Plan Compensation will equal Total Compensation. If the plan has Pre-entry Compensation, please do not deduct the pre-entry amount from the Plan Compensation total being reported on the census file. If an employee has Pre-entry Compensation that amount needs to be reported on the census file in column I. Please refer to the Explanation of Census Data for further information. Our plan has a short plan year? How do I know what compensation to include for short year testing? You should provide compensation and contributions for the time period of the short plan year. For example, if the short plan year is from 5/1/2019 through 12/31/2019 the compensation and contributions provided on the census should be for that same time period. Our plan is new with you this year. What compensation should I include on the census? If the plan converted to us during the plan year, the census file provided for plan year testing should include compensation and contributions for the entire plan year. Including the part of the plan year the plan was not with us.


Also, please make sure to provide prior year Total Compensation on the census for those employees who had earnings in excess of the highly compensated limit in the prior plan year. Prior 12 months’ compensation should be reported in column L of the census. This information is necessary to determine the Highly Compensated Employees. Our plan is new this year. Should I include compensation for the whole year, or only from the effective date of the plan? If the plan is brand new, then include compensation from the effective date of the plan to the end of the plan year. Also, if the company was in effect prior to the plan please make sure to provide prior year Total Compensation on the census file for those employees who had earnings in excess of the highly compensated limit in the prior plan year. Prior 12 months’ compensation should be reported in column L of the census. This information is necessary to determine the Highly Compensated Employees. What compensation is required for prior 12 months’ compensation? This is the TOTAL compensation received during the 12 months immediately preceding the plan year beginning date. My plan document is set up with W-2 compensation. What does W-2 compensation include and what box from the W-2 can I get that amount from? Please contact your legal or tax advisor for specifics on what is included in W-2 compensation and from what box on the W-2 you can get all or a portion of that information. The plans’ Basic Plan Document will also provide a general definition of W-2 Compensation. Should I include severance pay as compensation? A number of statutory changes to section 415(c)(3) took place in 2007 that effect the definition of severance pay, and take into consideration when severance is paid to the terminated participant as to whether or not it is included in reportable compensation for the plan year. If participants received any form of severance pay or trailing compensation, and you are unsure if the amount should be included as reportable income, please review the Amendment for the Final 415 Regulations that is included with the Plan Document to determine if those payments need to be included in Total Compensation on the census file. In general compensation paid more than 2 ½ months after severance of employment is not eligible 415 compensation and would not be reported. Should we include cafeteria, flex spending, and third party sick pay as compensation on our census? Please contact your legal or tax advisor for specifics in what is included in compensation based on the definition selected in the Plan Document. The plan’s Basic Plan Document will also provide a general definition of the compensation selected. The owners of our company receive K-1 compensation. Should this compensation be included on the census? Please contact your legal or tax advisor for specifics on what is included in compensation based on the definition selected in the Plan Document. The plans Basic Plan Document will also provide a general definition of the compensation selected. Should I calculate employer contributions based on the full compensation amount, or the limited compensation amount? Employer contributions should be calculated on the compensation selected in the Plan Document limited to the IRC 401(a)(17) compensation limit for the applicable plan year.


What is this year’s 401(a)(17) compensation limit? For the 2019 plan year the 401(a)(17) compensation limit is $280,000.

Helpful Hints for Census File Setup Rev. 12/03/2014

Helpful Hints for Census File Setup

Please review the following points prior to setting up your file:

Census data should be provided for everyone employed at any time during the plan year regardless of their length of employment or participation in the plan.

If the plan document provides for the exclusion of certain employees, please check for the appropriate employee status codes. See “Item 2-Employee Status” under the Explanation of Census Data for more details. Please use only the status codes listed in the booklet.

Any columns not applicable to your plan should be included to maintain the appropriate file layout.

Name format should be “LAST, FIRST” in all CAPS and in one cell.

Verify date fields are in “MM/DD/YYYY” format.

Check for duplicate Social Security Numbers (i.e., that there is one row for each individual even if they are employed at multiple divisions; that the Social Security Numbers are correct and not duplicated for different employees).

Check for missing or unreasonable dates and hours. In addition, please cap hours at 3,000.

Column I, Pre-Entry Compensation, must have a numeric value or 0.00.

Check Plan Compensation against Total Compensation (e.g., if the Plan Document excludes certain types of compensation, then Total Compensation should exceed Plan Compensation by the amount of the excluded compensation. In addition, if the Plan Document does NOT exclude certain type of compensation than Total Compensation and Plan Compensation will be the same.)

Provide prior 12 months’ compensation amounts for everyone who had earnings in excess of the highly compensated limit in the prior plan year in column L of the census file.

Indicate officer information with a “Y” or “N” for all employees. No field in Column R should be left blank.

Do not include column headings, subtotals, totals, formulas, or additional data items not requested.

Save census as a Text Tab Delimited File. (*.txt)

Excel Tips Rev.11/12/2019

Excel Tips Problem: The name field is not in the correct format (e.g., the correct format is 'Doe, John' and the census reads 'John Doe'). Correction: The following provides an example of the correction to this problem. Depending on the current format of the census, some or all of the following tools may be required to correct the format of the name field. If the first two columns of your census look like this:

1. The first step will be to separate the text: A. Insert blank column after column A by right clicking on the B column header and choosing "Insert". B. Highlight column A by clicking on the A column header. C. Choose "Data" on the toolbar, then "Text to Columns". D. Select "Delimited". E. Click "Next". F. Be sure the "Space" box is checked and be sure the line is separating the text correctly. G. Select "Finish". The worksheet should now look like this:

2. Now, combine the text in the correct order: A. Insert a blank column after column B. B. Click on cell C1. C. Type =B1&", "&A1 (be sure there is a space after the comma). D. Enter (The result should be DOE, JOHN in the C1 cell). E. Copy formula down through all affected rows. 3. Next, convert the formulas in column C to text: A. Right click on the C column header. B. Choose "Copy". C. Right click on C column header. D. Select "Paste Special". E. Under Paste options, choose on "Values". F. Click “OK”. G. Click on a cell in the C column, it should contain a name rather than a formula, e.g., "DOE, JOHN" rather


than "=B1&", "A1&". 4. Lastly, delete unnecessary columns: (A-B): A. Right click on the A column header. B. Choose "Delete". C. Repeat for remaining column. You should be left with one column containing names in the requested format as follows:

Problem: The Social Security Number field is not in the correct format (e.g., the correct format is "xxx-xx-xxxx" and the census reads "xxxxxxxxx", dropping the leading zero). Correction: 1. Right click on the column header that contains the Social Security Numbers. 2. Choose "Format Cells". 3. Under the "Category" options, choose "Special". 4. Under the "Type" options, choose "Social Security Number". 5. Click "OK". Problem: The date field is not in the correct format (e.g., the correct format is "01/01/2005" and your census reads "1/1/99"). Correction: 1. Right click on the column header that contains the dates with the incorrect format. 2. Choose "Format Cells". 3. Under the "Category" options, choose "Custom". 4. In the box provided under the "Type" input: mm/dd/yyyy, as illustrated below. 5. Select "OK".


If the above correction does not work, it is possible that the dates are in text, rather than numerical, format. To correct this: 1. Save the file as a text delimited file (.txt extension). 2. Close the file. 3. Open the file as an Excel spreadsheet (for instructions on how to open a text file into Excel, see the following Excel tip). This should convert the dates to numerical format and the steps above can then be followed to correct your date format. Problem: How do I open a text file in Excel? Correction: 1. Open Excel. 2. Choose "File" from the toolbar, then "Open". 3. In the "Look In" box click on the drop down menu and choose the directory / subdirectories that contains the file. 4. In the "Files of type" box, click on the drop down menu and choose "Text" file (*.prn, *.txt, *.csv). 5. Double click on the file name. A Text Import Wizard will appear. 6. Click on Finish. The file should open in Excel with each field in a separate column. You may have to adjust the column widths to view all data. 7. If the file does not correctly separate the fields into columns, be sure the file has a .txt extension. If the extension is correct, please contact us for assistance.


Problem: The census is not sorted in alphabetical order. (this is for informational purposes only - not a required step). Correction: 1. Be sure the name field is in the first column of the spreadsheet. 2. Highlight the entire spreadsheet by clicking on the box in the upper left hand corner of the spreadsheet (box above the 1 row header and to the left of the A column header). 3. Choose "Data" on the toolbar, then "Sort". 4. As shown in the following: A. Under "My list has", choose "No" header row. B. Under "Sort by", choose "Column A" and choose Ascending. 5. Click "OK".

Census Troubleshooting Rev. 12/03/2014

Census Troubleshooting

1. Save the file as a tab delimited text file with the extension "txt".

The census file must be saved as a Text (Tab delimited)(*.txt) file without any column headings or titles. All major spreadsheet programs are capable of saving into a text format. If you are using Excel, Lotus or Works to create the census file, select “File” then “Save As”. Once the "Save As" dialog box appears, enter the name you wish to save the file as in the ‘File name’ box and select "Text (Tab delimited)(*.txt)" from the drop-down menu in the "Save as type" box.

When the following box appears, choose "Yes".

Next, close your file. At this point choose "No". Your text file will be generated and saved.

Census Troubleshooting Rev. 12/03/2014

2. Verify that you do not have two employees with the same Social Security Number. A. Sort the SS# in ascending order B. Insert a new column after the SS# column C. Place the following formula in the first cell in the column you created in the previous step: (Formula

=if(B1=B2,1,0). D. This formula means if the value in cell B1 equals the value in cell B2, then indicate the number 1 if they

don't equal, indicate 0. E. Then total that column and if your value is not 0, you have at least two SS#'s that are the same. If there

are multiple SS#'s that are the same, verify that all other information is the same (ex. Hire date, Birth date, Compensation).

3. Once information is accurate, delete the additional column created in step 2. 4. Sort data alphabetically. To do this, highlight the entire census data and select the A/Z icon. Scan the census

for duplicate names. If any are found, view the data to determine if it is the same individual or two separate individuals with the same name.

5. Make sure you have 18 columns. Do not delete any extra columns of data not needed. (i.e. Rehire dates,

Plan Compensation if it is the same as Total Compensation). With the exception of the last column, simply include a blank column if no data is necessary. The last column must have a 'Y' or a 'N' for every employee.

6. Delete all headings and totals. 7. Clear extra rows and columns at the end of your spreadsheet. This will verify that there is no additional

information on the census. To do this, go to the first empty row at bottom of census, highlight all columns in several rows (50+). From the main toolbar, select “Edit” then “Delete”. Next, go to the first empty column to the right of the census, highlight several columns and delete them.

Census Upload Q & A Rev. 10/23/2017

Census Upload Q & A

Where can I find more information on how to upload my census? After logging onto the PSC, click on the “Video Demonstration” link and/or the “Compliance User Guide” link located under the Compliance tab drop down menu. I am trying to upload my census but when I logged into the PSC website, selected the Compliance page, and selected “Pending” under Census, the website did not give me the option to Browse or Upload my census. What should I do? You may not have “full” security access to the website. Since you can access the website and compliance pages, it appears you may only have “inquiry” access. Please contact Plan Tech Support for assistance. You may need to submit a Plan Service Center User Change Form which Plan Tech Support should be able to provide. Should column headers or totals be included on the census file? No, these are placeholders to indicate that information needs to be provided. All headings and totals should be deleted before the file is uploaded via the Plan Service Center. There should only be individual employee data on the census file. I have changes I need to make to the census. How do I upload a new census? If you have already submitted a census, the census prompt on the Plan Service Center needs to be reset to pending so that an updated census can be uploaded. Please contact your account manager or compliance analyst to reset the census I received a census error that indicates that the hire date cannot be later than the termination date. What should I do? You should always provide the original hire date, most recent termination date and most recent rehire date for employees as applicable on the census. If the most recent event is a termination of employment, a rehire date should not be provided. If employee history includes more than one of any of these dates, please email complete employment history to the account manager or compliance analyst within 48 hours of the census file being successfully uploaded so that updates can be made for compliance testing. Why does the computer message ask me to save the census file after it has been saved as a text tab delimited file? This is a Microsoft® Excel programming function. If you have already saved your file, you may answer “No.” When the census is uploaded, I receive several errors that reflect information as “X.” How do I fix these errors? Typically, the line numbers that correspond with the “X”s are the last lines of your census file. To prevent these errors, re-open the Excel version of the file, clear out all lines after the last employee’s information and re-save the file to txt. The file will need to be re-uploaded and those errors should no longer appear. If additional assistance is needed, please contact Plan Services for assistance at and select website support. I am receiving an error that says officer information is missing for some employees. However officer information is filled in for everyone. Open the census file in Excel and verify that officer information is in the correct in Column (column R). If officer information is in the correct column, then there may be a blank space before the N (no) or Y (yes) for such employees. This can be corrected by fixing the first entry by removing the blank space and then by copying the correction to the remaining cells. Be sure to change the “N” to “Y” for appropriate officers. Save changes and then upload the revised file.

Census Upload Q & A Rev. 10/23/2017

The downloaded census includes employees who terminated years ago. What should I do with these employees? Employees who have terminated in a prior year may appear on the census if the employee has an account balance and/or if a termination date was not provided. If there is no date of termination for the employee and the employee has zero compensation/contributions for the plan year, leave them on the census and compliance will assume the employees have terminated in a prior plan year for compliance testing purposes. If compensation and/or contributions for the employee are reported for the plan year, verify all census information and the employee will be included in compliance testing as applicable. I am receiving errors for lines that don’t have any information. How can I fix this? If there are only a few blank lines, then highlight those lines on the Excel census. Right-click (or select Edit) and delete. Re-save census and upload again. If there are many blank lines, cut and paste the text only (no extra columns or lines) into a new Excel spreadsheet. Re-save the census and upload the census again. I am receiving errors indicating people are missing from the census. When I checked the Social Security Numbers (SSNs) the SSNs are incorrect numbers for people already listed on the census with correct SSNs. How can I fix this error? The error cannot be bypassed or overridden. Most likely, an incorrect SSN was reported in the past for an employee. You will need to add the incorrect Social Security Numbers to the census. This means these people will be listed twice on the census. To identify the incorrect SSN, be sure to add a prior year termination date so that they are not included in the current test. The census upload system is looking for sequential order for dates. So, you may need to change the hire date in order to be able to assign a prior year termination date. You should also report a zero for hours, zero for pre-entry compensation, zero for plan compensation, and zero for total compensation. When loading the census again, warnings may appear showing the individuals terminated in the prior year but with contributions. Any contributions should be listed under the correct SSN. Lastly, please contact the Account Manager for assistance in correcting the incorrect SSNs in the recordkeeping system. This will prevent this same issue in future years. I would like the recordkeeping system to be updated with the hours provided on my census file for vesting purposes. How can I get hours updated? Once the census file is cleared of all errors and/or warnings you will receive three options to choose from when submitting. To update the recordkeeping system with the indicative data provided on the census for employees who are currently on our system you will need to select the “For Compliance and Recordkeeping Services” option. Please note, the hours will update the recordkeeping system only if the plan is set up to accept year-to-date hours and vesting services are provided.

Census Upload Errors and Warnings Rev. 11/6/2012

Census Upload Errors and Warnings

Errors - data issues that must be corrected before the census can be successfully uploaded. Warnings – possible data issues data that should be reviewed for accuracy and corrected if necessary. If you accept the warnings, we will use the assumptions indicated or as outlined in the Explanation of Census Data. Census Format: Dates - MM/DD/YYYY or M/D/YYYY Compensations & Contributions – numeric (0.00) Hours – numeric (000)

Validations Errors Warnings Warnings Assumption

Name if correct format was not used (last name, first name)

if first and last names are listed in separate columns

if name contains a suffix that was not listed correctly (Jr or II)

if punctuation was used other than a comma (,) to separate last and first name

if punctuation was used to separate last name and suffix (example: Doe, III, John)

N/A

N/A

Employee Status if invalid status used (example: A for active employees)

N/A

N/A

Social Security Number (SSN)

if duplicate SSN if SSN is missing from

census if census contains column

headings

N/A

N/A

Date of Birth (DOB) if future date if employee is less than 12 if cell is blank if employee is greater >

100

DOB of 1/1/1980.

Hours Worked if hours > 9999 if cell is blank if hours > 3000

If hours are not provided we will prorate based on hire date. If >3,000 we will limit to 2080.

Date of Hire (DOH) if cell is blank if DOH is < DOB if DOH is a future date

if employee hired before age 12

if employee hire after age 100

N/A

Date of Termination (DOT)

if DOT < DOH if DOT is a future date

if DOT = DOH If no DOT and EE has 0 compensation and or contributions for the plan year we will assume EE’s DOT prior plan year. If EE has contributions and or compensation per the system or census we will include EE in testing.

Census Upload Errors and Warnings Rev. 11/6/2012

Date of Rehire (DORH) if DORH = DOT if DORH is a future date DORH without DOT DORH < or = DOH

if DORH is before DOT No assumptions are made. However, we will review historical data if applicable.

Pre-Entry Compensation if negative number if > than total

compensation if blank (enter $0 if none)

N/A

N/A

Plan Compensation if negative number if > than total

compensation if blank (enter $0 if none) if $0 & EE has deferrals

N/A

N/A

Total Compensation if negative number if blank (enter $0 if none) if $0 & EE has deferrals

if total compensation is > $500,000

if hours > 0 and total compensation = $0

if active employment and total compensation = $0

If 0 hours and compensation are provided we will term EE in prior plan year.

Prior Year Compensation if negative number N/A N/A EE Elective Deferrals if negative number

if > plan or total compensation

N/A

N/A

ER Match Contributions if negative number if deferrals = $0 & match >

$0 if > plan or total

compensation

N/A

N/A

EE After-Tax Contributions

if negative number if > plan or total

compensation

N/A

N/A

ER Non-Elective Contributions

if negative number if > plan or total

compensation

N/A

N/A

Officers if blank (enter Y or N) if there is a blank space

before Y or N

N/A

N/A

EE on recordkeeping system with contributions but not included in census file

if EE is not included on census but has activity on system

N/A

N/A

Note: Once 1,000 errors are encountered the process will stop the validations and report the messages. Only 200 errors or warnings will be displayed. When all errors have been corrected, you will be able to accept all warning messages or choose to correct the warnings. If you encounter an Error and /or Warning that you do not understand or are unable to correct, please click the "contact us" tab on the Plan Service Center for information on how to contact us for help.

Entering Ownership Information Rev. 12/03/2014

Entering Ownership Information You will need to provide all employee owners (those owning more than ½% at any time during the plan year), their ownership percentage and their employed family members (spouse*, child, parent, grandparent, and legally adopted children/stepchildren). Employed family members need to be added even if the actual owner is not an employee. Include full ownership percentages up to two decimal places without rounding. *Effective September 16, 2013 under the Defense of Marriage Act (DOMA), the term spouse includes same-sex couples legally married in any state or foreign jurisdiction that recognizes such marriages regardless of state they currently reside. If the company is owned by a corporation or partially owned by stockholders or investing companies, please make sure to provide that information. If providing that information results in ownership totaling greater than 100% (i.e. controlled groups or participating employers), please provide the additional information to your Compliance Analyst in a separate document.

From the ‘Compliance Services’ page on PSC, click on “Pending” under “Ownership” heading.

If ownership was provided via the Compliance tab for the prior plan year end, you may select “Copy Ownership From Last Period.” You will then be able to change the information, add relatives and delete existing owners and add new owners from this screen. If ownership information was not provided on the Compliance tab last year, this option will not be available.

If the company has no employee owners or employed family members, please select “No Owners”.

To add employee owners, click on “Add New Owner”. This will take you to the ‘Enter Ownership Page’. Input the employee name, Social Security Number, and ownership percentage. Once complete, click on “Save”. You may continue to add owners until all employee owners have been entered.

You may add relatives by selecting the “Add Relative” button. You will need to input the name, Social Security Number, and relationship to owner.

When all owners and relative information has been entered, select the “Done Entering Ownership” button. Note: Once you have indicated that you are done entering ownership, you will not be able to make corrections to the Ownership information. Contact your Compliance Analyst to make any changes.

Once you have completed the ownership information, you will be taken back to the ‘Compliance Services’ page and a completion date will appear under the status for ownership.

If you select the “Complete Date”, you will be able to view the ownership information that was entered.

Completing the Year-End Questionnaire Rev. 11/8/2019

Completing the Year-End Questionnaire

From the ‘Compliance Services’ page on PSC, click “Pending” under the “Questionnaire” heading for the applicable plan year end.

Answer each question and advance to the next question by selecting “Save & Go to Next Page”.

If you would like to skip a question and answer it at a later time, select “Skip and Go to Next Page”. You can return to skipped question(s) by clicking the “Skip and Go to Index” button and clicking on the appropriate question title.

The final question asks if you would like to submit your answers to Compliance Services now; you will need to answer “Yes” and select “Save & Exit Questionnaire” in order to transmit this information to us.

Once you have responded to the final question, you will be taken back to the ‘Compliance Services’ page and completion date will appear under status for the “Questionnaire”.

If you select the completion date for the “Questionnaire”, you will be able to review a report with the questions and your answers.

At any point in the process you may click the “Printable Version” link located at the top of the page. This will display the entire questionnaire with all questions and answers that have been completed.

Explanation of ADP/ACP Leveling Method Rev. 10/1/2017

Explanation of ADP/ACP Leveling Method for Corrections

The Average Deferral Percentage (ADP) and Average Contribution Percentage (ACP) are calculated separately for the Highly Compensated Employees (HCE) and the Non-Highly Compensated Employees (NHCE). The individual percentage is calculated first (employee deferral contribution divided by compensation for the deferral percentage; match and after-tax contributions divided by compensation for the contribution percentage). Then the total HCEs percentages are added together and divided by the number of HCEs to determine the HCE Average. The same is done for the NHCEs. The IRS regulations state that the testing must pass either the basic test or the alternative test. With the basic test, the HCEs average percentage must not exceed 125% of the NHCEs average. The alternative test states that the HCEs average cannot exceed the NHCEs average by the lesser of 2 plus or 2 times. When a plan fails ADP or ACP testing the corrective refunds are determined using a two step process. This process is shown in the Details of Test Corrections portion of the ADP/ACP Non-Discrimination Test report that is available under the compliance section of the website for the applicable plan year. Below is an explanation of the steps. Step 1 The first step of the correction is to determine the total plan refund amount. This is achieved by lowering the HCEs average deferral, starting with the HCEs that have the highest deferral percentage, to the point where the HCE ADP would satisfy the basic or alternative test as mentioned above. The difference between the HCEs original deferral amounts and the re-calculated deferral amounts (based on the reduced percentages) is the total amount that must be removed from the plan. This step is shown in Part I – Calculated Adjustments of the ADP/ACP Non-Discrimination Test. Step 2 Once the total refund amount is determined for the plan (Step 1), the next step is to determine the refund amount for the individual HCEs. IRS regulations state that the refunds begin with the HCEs that have the highest deferral amount and deferral amounts are reduced in a descending order until the full refund amount has been exhausted. This is shown in Part II – Actual Adjustments (Corrective Distribution Amounts) of the ADP/ACP Non-Discrimination Test. During this step available catch-up amounts are also applied. Attributed Match Calculation If an HCE received matching contributions on deferrals that are being refunded for an ADP failure, the plan may forfeit these attributed matching contributions (ATM) to maintain a uniform rate of match. The ATM will depend on the plan’s match formula. If the match formula was applied to the returned excess deferrals these matching contributions will be considered ATM. This entire process (except the ATM) is then repeated for the ACP (match/after tax) portion of the test. The only difference is that vesting is applied to the ACP refund amounts. Part III – Corrective Summary of the ADP/ACP Non-Discrimination Test shows the summary of ADP, ACP and ATM refund amounts per participant. This section also shows the participants’ vesting percentage. Please note the distributable amounts do not include earnings. Associated earnings will be calculated when the corrective distributions are processed.

On-Demand Compliance Testing Rev. 12/16/2014

On-Demand Compliance Testing

Interim tests can be performed at any point during the year from data stored on the record keeping system or from externally provided information.

Log onto the Plan Service Center (PSC) and access the Compliance Tab to download testing data from the recordkeeping system; similar to the year-end data collection. Review and make changes to the data as needed and then upload the data to use for interim testing. The automated testing system then takes the approved data and performs the Actual Deferral Percentage (ADP) and/or Actual Contribution Percentage (ACP) compliance testing. The ADP/ACP test is generally used to make sure 401(k) participants benefit equally from their plans.

As part of the On-Demand testing process, clients will receive an e-mail notification once the ADP/ACP testing has been completed. Clients can retrieve their Test Results Letter, ADP/ACP Test Results Report, Highly Compensated Employees (HCE)/Key Report and a Questionable Data Report from the Plan Service Center under the Compliance Tab. The Questionable Data Report gives information about the data provided to ensure the best possible test results.

Simply follow these easy steps to complete On-Demand Compliance Testing:

Log on to the Plan Service Center

Watch the On-Demand Video

Create interim testing period

Upload plan data

Review results How to Get Started Compliance Video Demonstration - A video tutorial on how to take advantage of this service is available by clicking on the Video Demonstration menu and selecting the On-Demand Testing option. Each of the video demonstrations is designed to familiarize you with all the services available under the compliance tab. Create Interim Testing Period - To take advantage of On-Demand, you will need to create the interim testing period. This period can be for any length of time during your current plan year as long as it is less than twelve months. Click on the Create Period link after you have input a beginning and ending test date. The interim testing period will then be available in the Compliance tab. Upload Your Plan Data - Similar to the year-end data collection you will need to upload the census and ownership information for the interim testing period. Review Your Results - In approximately 2-3 business days you will receive notification that the interim test results are available under the Items to Review option. Plan Services is available if questions arise or if you need a more consultative approach contact your Compliance Analyst.

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