Retirement Plan Updates

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New Limits for 2009 & 2010

• The maximum deferral limit a 401(k) plan participant may elect in 2009 and 2010 is $16,500 for individuals under age 50 and $22,000 for individuals age 50 and over. Maximum plan contributions to a participant’s account is 100% of pay or $49,000. ($54,500 for those with catch-up).
• The current deduction limit for profit sharing plans remains at 25% of compensation.
• The retirement compensation limit is $245,000 for 2009 and 2010.
• Simple Plan Limits:  The maximum deferral contribution is $11,500 for 2009 and 2010.  The catch up for individuals age 50 or over remains $2,500.

Holiday Schedule

Our office will close at noon on December 24th  and will be closed all day on December 25th.  There will be limited staff in the office between the hours of 10:00 AM and 2:00 PM, Monday, December 28 through Wednesday, December 30.  We will close at noon on December 31st and we will be closed all day on January 1st.    . 

Estimated Testing

If you would like our firm to prepare an estimated ADP test, please send us your census (all employees through 9/30/09) via email or by diskette in Lotus 1,2,3 or in Excel.  If you need a census sheet, please email us to request one (retirement@profben.com).  Estimated testing is recommended for our clients who have previously failed their ADP tests, are a first year plan or who have other complicated ownership or testing issues.  Estimated testing is not generally needed for plans that are Safe Harbor, Profit Sharing Only or plans where owners and highly compensated employees do not participate. Our firm does not charge for this test. 

IRS Safe Harbor Provision - Annual Notification is Required!!

The IRS allows plans to make a 100% vested contribution which will enable the plan to pass the Actual Deferral Contribution, Actual Compensation Contribution and the Top Heavy tests.  Implementation of this provision for the 2010 plan year requires advance notice to employees by December 1, 2009 at the latest.  If you are interested in this provision and do not already have a notice to post for 2010, please call us.  The Safe Harbor match also satisfies the top heavy test.      

EGTRRA Document Restatement

Due to IRS Regulations, all Retirement Plan Documents must be restated (rewritten) for EGTRRA to incorporate changes made by the IRS.  This restatement will include all amendments since plan inception or the last restatement, and is required to keep retirement plans “qualified” under the law.  All retirement plans with a PBS, Inc. document will be restated in late 2008 or during the 2009 plan year.  By January, you will either receive a new restated document with 415 provisions or you will receive a 415 amendment so your document can be restated later.  Regardless of whether you receive the full document or the amendment, it is important that the signature pages be signed and returned to our office immediately.  If you have not already completed an EGTRRA document instructions sheet and returned it, please contact our office as soon as possible.

 

Section 125 Cafeteria Plan Updates

Over-the-Counter Medications Now Covered

Now, by participating in a 125 Cafeteria Plan, you will be able to pay for those over-the-counter medicines that previously were not eligible.  Over-the-counter items used to alleviate or treat a specific injury or illness that are now eligible for reimbursement through a 125 Cafeteria Plan include: allergy medicines (such as Claritin), headache remedies (such as aspirin or ibuprofen), and medicines to treat colds and flu.   Also, eligible are muscle pain ointments, Pedialyte, Nicotine gum and patches, glucosamine/chondroitin for arthritis and diaper rash ointments.  (Over-the-counter items such as vitamins, dietary supplements, most herbal remedies, and personal-use items are still not eligible.)  For a list of approved over-the-counter items try www.healthzone.com .

Debit Card Technology (BPS)

We offer the Metavante Benefits Payment System debit card system, which automates the process of paying for eligible pretax account expenses. It enables employees to use the debit card at eligible FSA locations wherever MasterCard or Visa is accepted. Approved expenses are automatically deducted from participant's pretax account, which is prefunded by the employer. The debit card eliminates claim forms, double out-of-pocket payments, and waiting for reimbursement checks. The BPS card has proven to be very popular with our clients and has significantly increased participation in the 125 Cafeteria Plans that offer it. All account information is located online and employees can access their personal information at their convenience. More information can be located at their web site found at http://www.benefitspaymentsystem.com.

The card will not be accepted at all MasterCard locations because it can only be used for qualified medical expenses. For example, it will not be recognized at department stores or restaurants.

FSA Calculator

This innovative product allows you to help your employees estimate their out-of-pocket costs for medical, dental and vision coverage. To use this new estimating tool, launch the calculator at www.fsaandyou.com.