A 401(k) Plan, also known as Traditional 401(k) Plan is a Defined Contribution Plan that has been established by an employer to enable employees to make pre-tax contributions by salary reductions into the plan.

Plan administration refers to the periodic ministerial duties that are required to be performed to maintain a Oualified Retirement Plan. It does not include legal or investment services.

A Cross-Tested Plan, also known as a New Comparability Plan, is a Defined Contribution Plan in which employer contributions are allocated to participants using a formula that satisfies nondiscrimination tests based on plan benefits rather than plan contributions.

A Defined Contribution Plan is a Qualified Retirement Plan that is established by an employer on behalf of its employees for their retirement. An individual account is established for each participant. The amount that is available to the participant upon his retirement (or termination of employment as provided in the plan document) is based on the amount contributed to the participant's account and any income, expenses, gains, losses (including changes in market values), and forfeitures allocated to the account or balance. A Defined Contribution Plan is also called an Individual Account Plan.

EGTRRA is an acronym for the Economic Growth and Tax Relief Reconciliation Act of 2001.

ERISA is an acronym for the Employee Retirement Income Security Act of 1974.

A responsible person, related to a retirement plan, who holds or controls property (investments) for the benefit of another (participant). ERISA also defines a fiduciary as any person who:

1. exercises any discretionary control over the management of the plan or management or disposition of the assets, or
2. renders investment advice for a fee or other compensation with respect to the assets of the plan, or
3. has any discretionary authority or responsibility in the administration of the plan.

A fiduciary must perform his duties in the interest of the participants and beneficiaries of the plan. Duties include paying the reasonable expenses of the plan.

Forfeitures are contributions that remain in a plan after a participant has terminated employment and has received his vested distribution. In a profit sharing plan, these unvested contributions may be allocated to remaining plan participants or be used to reduce future employer contributions.

GATT is an acronym for The General Agreement on Tariffs and Trade enacted December 8, 1994.

GUST is an acronym of acronyms for a series of tax laws that affect retirement plans. The acronyms for the tax laws included in GUST are GATT, USERRA, SBJPA, TRA '97, and RRA '98.

A Money Purchase Plan is a Defined Contribution Plan in which the employer's required annual contributions are specified in the plan document, usually as a percentage of compensation.

see Cross-Tested Plan

A nonstandardized prototype plan is a prototype plan that includes one or more provisions that require a direct determination from the Internal Revenue Service in order to be deemed a qualified plan.

We will also provide you with appropriate references for Single Man 401(k) and SIMPLE plans and SEPs.

A plan document is the written legal evidence that describes the specific provisions of a plan. A plan is the arrangement under which employer and employee contributions, if any, are deposited with a trustee who is responsible for administering and investing the contributions and paying benefits. The plan document may also include the trust agreement.

The plan sponsor is the person or entity (generally the employer) who makes the plan available to its employees. As plan sponsor, the employer must accept some fiduciary responsibility for the management of the plan and its assets. Though many plan functions can be delegated to others, the employer will retain some responsibility and potential liability for the plan's operation.

A profit sharing plan is a plan that is established and maintained by an employer to share company profits with employees or their beneficiaries.

A prototype plan is a standardized plan that has been approved and qualified as to its concept by the Internal Revenue Service.

A Qualified Retirement Plan is a plan maintained by an employer that provides retirement income to employees or results in deferral of income to the end of employment or beyond. The plan must meet extensive Internal Revenue Service requirements that allow for special tax treatment of contributions.

RRA '98 is an acronym for Internal Revenue Service Restructuring and Reform Act of 1998.

A Safe Harbor 401(k) Plan is a 401(k) Plan that includes specific notification and contribution features that eliminate the need to test the contributions for certain nondiscrimination features.

SBJPA is an acronym for the Small Business Job Protection Act of 1996.

SEP is an acronym for Simplified Employee Pension Plan. It is basically an IRA that is allowed to receive contributions from the IRA holder's employer. The employer is required to make contributions to the IRAs of all qualifying employees. There are significantly less administrative and fiduciary responsibilities than most other retirement plans.

SIMPLE is an acronym for a Savings Incentive Match Plan for Employees. This plan may be structured as a SIMPLE IRA or a SIMPLE 401(k).

A SIMPLE 401(k) is a salary reduction plan geared for employers with 100 or fewer employees that requires less administrative paperwork than a 401(k) Plan and provides for limited employee and limited but required employer contributions. It is structured as a 401(k) Plan and must satisfy other rules governing qualified and 401(k) Plans.

A SIMPLE IRA is a salary reduction plan geared for employers with 100 or fewer employees that requires less administrative paperwork than a 401(k) Plan and provides for limited employee and limited but required employer contributions. It is structured as an IRA.

A Single Man 401(k) Plan, also known as a One-Person 401(k) Plan, is a 401(k) Plan that is established by a business that only employs owners and spouses.

Chautauqua Plan Administrators, Inc. defines a small or medium sized business as a business with as few as one employee to as many as several thousand employees. The business wants to offer a retirement plan to its employees but realizes that it lacks the time and/or internal expertise to obtain the knowledge to select and install the appropriate plan and administer the plan on an ongoing basis.

A third party retirement plan administration firm is an organization that performs the record keeping requirements that a plan sponsor accepts when it adopts a retirement plan for the benefit of its employees. Typically, plan sponsors do not have the expertise or time to devote to the detailed administrative issues that are required to maintain their plan in compliance with various Internal Revenue Service, ERISA, and Department of Labor requirements. Therefore, they seek the advice of an experienced independent third party consultant to assure that these requirements are met.

A Target Benefit Plan is a Defined Contribution Plan in which the employer's required annual contribution is an actuarial calculation based on the number of years remaining to the participant's retirement date and the target benefit under the plan.

A Third Party Administrator is an individual or firm who is engaged by the Plan Administrator to perform the ministerial administrative responsibilities of the plan. See also third party.

TRA '97 is an acronym for the Taxpayer Relief Act of 1997.

A trust agreement is an agreement that discloses the methods of receipt, investment, and disbursement of funds under a retirement plan. The trust agreement may be a separate agreement or may be included in the plan document.

A trustee may be a corporate trustee (trust company) or an individual as designated in the trust agreement. The trustee is responsible for holding and investing plan contributions and other financial aspects of the plan.

Chautauqua Plan Administrators, Inc. specializes in the design and administration of the following types of Defined Contribution Plans:

• Profit Sharing Plan
• Traditional 401(k) Plan
• Safe Harbor 401(k) Plan
• Money Purchase Pension Plan
• Target Benefit Plan
• New Comparability (Cross-Tested) Plan

Chautauqua Plan Administrators, Inc. offers a Defined Contribution Prototype Plan that is approved by the Internal Revenue Service and is current with all modifications and revisions required by GUST and EGTRRA. Our prototype plan is very comprehensive, which allows plan sponsors to design a plan document that is specifically desirable for its employees. We also offer a nonstandardized prototype plan for special issues that will need specific IRS approval to implement.

USERRA is an acronym for the Uniformed Services Employment and Reemployment Rights Act of 1994.

A participant's right to receive a retirement benefit because he has met the service requirement of the plan. Employee contributions are always fully vested. Employer contributions are earned based on a vesting schedule established in the plan document.

Web Access permits a participant to review his account balance on demand using password-protected Internet access. See a demo here.