Coastal Pension Services
third party administrators
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Installation Services (New Plan)

Plan Design

It begins with a consultation with the plan sponsor regarding the different plan options such as 401(k), Profit Sharing, Defined Benefit and the various plan provisions (i.e., eligibility requirements, vesting, type of contributions, distribution features, loan features, etc) to address plan sponsor's specific needs for a retirement plan.

Document Preparation

Coastal will draft your plan documents, along with all supporting documentation such as the Corporate Resolution, the Summary Plan Description, a Loan Policy (if applicable), etc. We’ll also create any additional ancillary forms needed to implement the plan.

IRS Submission

Depending on the plan design, some plans must be filed with the IRS to obtain a favorable determination letter. If applicable, Coastal will prepare all of the necessary forms required to file your plan document with the IRS.

Additional Services

Preparation of Enrollment Application and Beneficiary Form, obtain a Trust Identification number for new plan from IRS, furnish instructions regarding required Trustee Bond coverage. For new 401(k) plans, Coastal will prepare a projection of the 401(k) discrimination test for the first plan year once enrollment of employees has been completed to determine approximate amount which can be deferred by Highly Compensated employees.

Enrollment Meetings

A representative from Coastal Pension Services will attend the employee enrollment meetings to explain the plan provisions and to educate employees about the advantages of participating in the plan. Coastal cannot provide education or advice regarding plan investments; however, this information will be provided by the investment advisor selected by the plan sponsor.

Take–Over Services (Existing Plan)

Collect Historical Data

Coastal Pension Services will obtain from either the plan sponsor or current vendor all documentation needed to takeover the administration of the plan. Such items are, but not limited to, the current plan document along with any amendments, current Summary Plan Description and most recent valuation that contains participant census, account balances, vested percentages and non-discrimination testing.

Document Preparation

Plan will be amended and restated (if using another company’s prototype), along with supporting corporate resolution, loan program (if applicable) and all additional ancillary forms and Supplemental Participation Agreements (as needed).

IRS Submission

Depending on the plan design, some plans may be filed with the IRS to obtain a favorable determination letter. If applicable, Coastal will prepare all of the necessary forms required to file your plan document with the IRS.

Plan & System Set–Up

Prepare the initial applications and all related forms to establish the plan with the record keeper. Once assets have been transferred, provide per–participant/per–source breakdown of transferred assets directly to the record keeper. If applicable, provide loan conversion information to the record keeper for any outstanding participant loans.

Terminated Participants

Provide a letter to be used to notify all terminated participants of the change in the investment platform and their options for distribution from the plan.

Blackout Notice

Prepare the required Blackout Notice to be provided to the plan sponsor for distribution to all plan participants.

Enrollment Meetings

Upon request, a representative from Coastal Pension Services will attend the employee enrollment meetings to explain the plan's provisions and to educate the employees about the advantages of participating in the plan. Coastal cannot provide education or advice regarding plan investments; however, this information will be provided by the investment advisor selected by the plan sponsor.

Additional Services

Preparation of Enrollment Application and Beneficiary Form. Work with Investment advisor to arrange for transfer of existing plan assets to the new record keeping platform (if applicable).

Annual Administration Services

Data Collection

Furnish plan sponsor with written request for information needed to prepare compliance testing and IRS reporting for the plan, including census data, ownership information, terminee data, etc.

Follow–Up & Tracking of Due Dates

Periodic follow–up requests for data needed from plan sponsor will be sent. All reporting and disclosure of deadlines will be tracked to assure that reports are furnished on a timely basis.

Compliance Testing

Annual compliance testing will be prepared as follows:

  • 410(b) Coverage Testing
  • 404 Deduction Limit Testing
  • 415 Maximum Annual Addition Testing
  • 416 Top–Heavy Testing
  • 401(k)/(m) Discrimination Testing
  • 401(a)(4) General Testing (for cross-tested plans)


In the event of a compliance test failure, plan sponsor will be notified of the action needed to correct the failure.

Valuation Process

Eligibility requirements will be checked annually to verify that all eligible employees are included in the plan. Vested percentages will be determined annually based on hours worked as reported by the plan sponsor (unless Elapsed Time Method is being used). Employer contributions will be calculated, allocated and plan forfeitures will be utilized as specified in plan document.


Coastal will correspond directly with terminated participants to obtain the necessary distribution paperwork needed before payment can be made. Upon receipt of proper paperwork, Coastal will forward the distribution request form to the authorized representative or plan sponsor for processing. All tax reporting will be handled by the respective vendor/custodian.

Client will be contacted when a Minimum Required Distribution is needed (for owners over age 70 ½) and the proper amount to be withdrawn from the plan will be determined. Coastal will prepare the distribution form and sent to the plan sponsor for signature. All tax reporting will be handled by the respective vendor or custodian.

Participant Loans

Preparation of initial loan package (including payroll withholding authorization, promissory note, irrevocable pledge and assignment form, truth-in-lending disclosure, and amortization schedule), along with distribution form.

IRS 5500 Filing

Annual Report will be prepared (signature ready) and mailed to the Plan Sponsor for signature along with Summary Annual Report to be distributed to all plan participants. NOTE: for plans requiring CPA audit, plan sponsor is responsible for retaining the services of an independent accountant to handle the audit. Coastal will work with the accountant to provide information they need during the audit process.

Plan Administration Frequently Asked Questions

Why do we need to complete the data request information?

Employers are required to value their retirement plan as of the last day of each plan year. In order to properly value the plan and complete all of the required compliance testing, certain data must be collected and analyzed. Much of the needed information can be generated from your payroll system or provider. If you have questions about any of the information requested, please call your Account Executive at Coastal.

Who is an Employee for retirement plan purposes?

In general, an employee is anyone who is paid W-2 compensation or any other acceptable form of compensation as defined in your document (such as net Schedule C income in the case of sole proprietors, or K–1 income for partners). Independent contractors who are paid 1099 income are not considered employees for plan purposes. An employee will become a participant in the retirement plan if the employee satisfies the terms of eligibility defined in your document.

What is net income?

Some businesses are not incorporated (such as sole proprietors, partnerships, and limited liability companies). In the case of these types of entities, you must report the self-employed net income earned by the sole proprietor, partner, or Member after all expenses except pension costs have been deducted.

What is Compensation Prior to Entry?

This refers to the Compensation paid to an employee prior to becoming eligible to enter the plan. This does not necessarily mean when an employee actually begins deferring money into the plan, but rather when the employee is first eligible to defer money into the plan. Example: An employee satisfies the eligibility requirements of the plan and may enter the plan 7/1/2015. The employee delays participating and does not begin deferring until 10/1/2015. The compensation prior to entry for this employee would be the compensation paid from 1/1/15 through 6/30/15.

How are hours reported on the census?

The hours should be reported for services rendered as an employee (for which the employee is directly or indirectly paid). Thus, you should include hours worked for vacation pay, sick pay, and other paid absences. Many documents are designed to report actual hours worked for hourly employees and to credit 10 hours for each day worked for salaried employees. You should check your plan document to determine how Hours of Service are determined for your plan.

What is the difference between a 401(k) plan and a 403(b) plan?

These sections of the Internal Revenue Code allow employees to reduce their salaries on a pre-tax basis and save the salary reductions (known as deferrals) in a retirement plan. The 401(k) is adopted by “for profit” companies while the 403(b) plan may only be adopted by certain non-profit organizations.

What are class distinctions?

Classes are established in some retirement plans to segregate the work force of a company. They are typically used to exclude a portion of the work force from benefiting in the retirement plan or to set up groups to receive a different level of benefit. Location and divisions are also common methods of work force segregation.

What are rehires?

A rehire is an employee who previously worked for a company, terminated and came back to work for the company. A rehired employee who was a participant in a retirement plan, immediately re-enters the retirement plan upon his/her return to work and is not required to wait for an entry date defined in the plan. In most cases, the employee gets credit for the previous service. In addition, if the nonvested portion of the employee’s account was forfeited in a prior distribution, the employee has an opportunity to repay the prior distribution in order to recover the forfeited amount. If you rehire an employee, we encourage you to call your Account Executive at Coastal to discuss the specific impact of the rehire.

Is it important to report the reason a participant terminates?

Yes. Depending on how the rules are defined in your plan document, distributions and perhaps future contributions may be handled differently for participants who terminate employment by reason of death, disability or retirement than participants who simply leave the company. It is also important to report if participants were laid off by the company rather than leaving of their own volition.

Can retirement plan benefits be paid on severance pay?

No. Salary reduction deferrals may not be taken on severance pay and Employer contributions will not be made on severance pay. When you are reporting compensation information to Coastal, you should not include any severance pay, or any compensation paid to the employee more than 2–1/2 months after the employee’s termination date.

Are there limits on the benefits a participant may receive on an annual basis?

Yes. In the case of 401(k) plans, the IRS establishes the dollar maximum a participant may defer each year. For example, the dollar maximum in 2015 is $18,000. If the document permits, participants who are at least age 50 by the end of the plan year may defer an additional $6,000 as a catch-up contribution. Although it is less common today, the plan document may also impose a “percentage of salary” restriction on the amount a participant can defer (for example, limiting the deferral to no more than x% of salary). Each year the IRS will also establish the limit a participant may receive for the plan year from all sources (salary deferrals and all Employer contributions and reallocated forfeitures). This is known as the 415 limit and the limit for 2015 is $53,000. Catch–up contributions made by older participants are not counted against the limit, so that a participant eligible to make catch-up contributions may effectively receive $59,000 in allocations in 2015.

Plan Termination Services

Coastal will provide all services required for either a formal or informal plan termination. Services consist of all disclosures and notices to participants, all IRS 5500 filings during termination process and distribution paperwork to participants when assets are released from the plan.

Miscellaneous Services

Coastal will prepare studies, projections and plan amendments as requested by the plan sponsor. If Coastal Pension Services regional prototype or volume submitter is used, Coastal will be responsible for notifying the plan sponsor when plan amendments are needed to the plan to maintain its qualified status.

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