SIMPLE Retirement Account
(SRA) Program
Employer’s Administration Guide
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Table Of Contents
Page
Determine Your Employer Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Establish Your Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Administer Your Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Determine Your Employer Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Review Your Employer Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notify Employees Eligible to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Gather Salary-Reduction Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Withhold Salary-Reduction Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Make Your Employer Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Sample Employee Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1
SIMPLE Retirement Account (SRA) Program
This guidebook provides the information you need as an employer to establish and administer your
SIMPLE Plan effectively.
Determine Your Employer Eligibility
Establish Your Plan
Administer Your Plan
Determine
Your Employer
Contribution
Review Your
Employer Eligibility
Make Your
Employer
Contribution
Withhold
Salary-Reduction
Contributions
Notify
Eligible Employees
Gather
Salary-Reduction
Agreements
2
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SIMPLE Retirement Account (SRA) Program
Determine Your Employer Eligibility
Administer Your Plan
The following is a brief overview of requirements you must
The diagram on page 2 illustrates the steps you should
meet to establish and maintain an SRA program. Generally,
take to administer your SRA program, and the following
employers may have no more than 100 employees who
overview discusses each step in further detail.
received at least $5,000 of compensation in the previous
As you can see, administering your SRA program is a
calendar year. If this eligibility requirement is not satisfied
continuing process. As your circumstances and objectives
during any calendar year, you are generally permitted to
change, you may need to make certain adjustments to your
maintain the plan for an additional two years following that
SRA program. Additionally, because the laws, regulations
calendar year. (In the event of an acquisition, disposition
and provisions governing your SRA program are complex
or similar transaction, special rules apply.)
and subject to change, we recommend that you consult
In addition, you will not be eligible to maintain a SIMPLE
your tax advisor to ensure that you are administering your
plan if any contributions (employer or employee) were made
plan in accordance with applicable requirements.
to or benefits were accrued under any other qualified plan
during the calendar year in which the SIMPLE plan will be
in effect.
Determine Your Employer Contribution
As the employer, you are required to make a contribution
Because
thelaws,
laws,regulations
regulationsand
andprovisions
provisionsgoverning
governing
Because the
to the SRA program each plan year. You can contribute
these
plansare
arecomplex,
complex,we
we recommend
recommend that
that you
you consult
these plans
a dollar-for-dollar match for each plan participant’s salary-
your
you have properly
properly established
your tax
tax advisor to ensure that you
estab-
reduction contribution in an amount:
and
areand
properly
maintaining
your SIMPLE
plan. plan.
lished
are properly
maintaining
your SIMPLE
• Up to 3% of his or her compensation (for each
plan year); or
Establish Your Plan
To establish your SRA program, follow the steps
listed below.
1. Review the Merrill Lynch Prototype SIMPLE
Retirement Account Plan Document and
consult your tax advisor.
2. Complete the Merrill Lynch Prototype SIMPLE
Retirement Account Plan Employer’s Adoption
Agreement. Generally, you may establish an SRA
program between January 1 and October 1.
between Jan. 1 and prior to Oct. 1.
3. Keep a copy of the completed Adoption Agreement
3
Upto—but
to — butnot
notincluding—3%,
including — 3%,
and
less
than
• Up
and
notnot
less
than
1% of his or her compensation in any two years
during the five-year period ending with the current
plan year.
Alternatively, you are permitted to “elect out” of the match
and instead make a nonelective contribution equal to 2%
of each
eligible participant’
participant’s
compensation — whether
each eligible
s compensation—whether
or or
not he or she made any salary-reduction contributions to
the plan.
If you “elect out” of the 3% matching contribution and
make one of the other permissible employer contributions,
you must notify each eligible employee of your decision in
the annual notice to eligible employees. See the section
and return the other completed copies to your
titled “Notify Employees Eligible to Participate” on the
Merrill Lynch Financial Advisor.
next page.
• The most recent copy of the Merrill Lynch SIMPLE
Review Your Employer Eligibility
Retirement Account Summary Description.
It is important for you to review your employer eligibility
• A copy of the SIMPLE Retirement Account Program
requirements annually because certain events may affect
Salary-Reduction Agreement or your own salary-
your status as an eligible employer, such as adding or
reduction agreement form.
losing employees, increasing the compensation paid
or participating
participating in
in aa merger, acquisition
to employees,
employees or
or dissolution.
Merrill Lynch
Lynch is
is acting
IfIf Merrill
acting as
as the
the custodian
custodian for
for new
new participants’
particiSRAs, participants
will alsowill
receive
a copy of
the SIMPLE
pants’
SRAs, participants
also receive
a copy
of the
Custodial
Agreement
brochurebrochure
containt containing
the Merrill the
Lynch
SIMPLE
Custodial
Agreement
Notify Employees Eligible to Participate
Merrill
SIMPLEAccount
Retirement
Account
Disclosure
SIMPLELynch
Retirement
Disclosure
Statement
and
You must notify participants of their ability to make initial,
or to modify existing, salary-reduction contributions under
Statement
and Custodial
they openwith
their
Custodial Agreement
whenAgreement
they openwhen
their accounts
accounts
with
Merrill
Lynch.
Merrill Lynch.
the SRA program immediately preceding the annual—and
period.11 The
The annual
annual
each new participant’s — election
participant’s—election period.
Gather Salary-Reduction Agreements
election period is normally the 60-day period immediately
before the beginning of a plan year. For an employee who
becomes eligible to participate in the plan during the plan
year, you may specify an “election period” that is either a
60-day period that includes the first day the employee
becomes eligible or a 60-day period that includes the day
before the employee becomes eligible.
IfIf you elect out of the 3% matching contribution,
contribution, employees
employees
must
before the
must be notified within a reasonable time frame before
annual
election
period
of the
planplan
yearyear
in which
the the
alternathe annual
election
period
of the
in which
employer
contribution
will be will
instituted.
tive
alternative
employer
contribution
be instituted.
During the 60-day election period, eligible employees will
will
decide whether or not to make salary-reduction contributions
contribuunderunder
the SRA
To ease
election
process,
tions
theprogram.
SRA program.
To the
ease
the election
process,
Merrill Lynch provides the SIMPLE Retirement Account Program
Salary-Reduction
Agreement.
Employees
may electmay
to have
Program
Salary-Reduction
Agreement.
Employees
elect
their
salary-reduction
contributions
range from
1%from
to 100%
to
have
their salary-reduction
contributions
range
1% of
2
2
Salary reduction
contributionscontribumay not
their
compensation.
Salary-reduction
to
100%
of their compensation.
be made
tions
mayretroactively.
not be made retroactively.
During the annual election period (or a new
new participant’s
participant’s
election period), you should gather the salary-reduction
Review your SRA Adoption Agreement to determine which
agreements from each employee electing to make aa
contribution for the plan year. Make sure each
each agreement
agreement
employees are eligible to participate in the SRA program.
has been properly completed and signed by the
the employee.
employee.
For example, if you require that employees must earn at
least $5,000 in compensation in any one of two prior
calendar years, you must remember that participants
satisfying the $5,000 requirement in a certain year may
not be eligible to participate in the SRA program until
Jan.
1 of1the
nextnext
planplan
year.
Eligible
employees
should
January
of the
year.
Eligible
employees
should
be sent the following SRA program documents immediately
before the appropriate election period:
• The Merrill Lynch Client Relationship Agreement,
which is required for participants who open
accounts with Merrill Lynch. Contact your Financial
1
Advisor for more information.
• The completed SIMPLE Retirement Account Program
Employer Notice, or your own form notifying
employees that they are eligible to participate and
of the contribution to be made by the employer. You
should keep a copy of the notice for your records.
2
If an employee leaves your employment to serve in the military,
you may have an obligation to provide the employee with the right
to make and receive contributions to the plan upon his or her
re-employment. See Section VIII of the Merrill Lynch SIMPLE
Retirement Account Summary Description for an explanation of
such rights and consult your tax advisor for more details.
Participating employees may make annual salary-deferral contributions of up to $11,500 for 2010, and employees age 50 or older
can defer an additional “catch-up” contribution of up to $2,500 for
2010. This amount may be increased periodically by the IRS to
reflect cost-of-living-adjustment.
4
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This employer’s administration guide is an important tool in administering your SRA program.
Withhold Salary-Reduction Contributions
As previously stated, you must make one of the following:
Salary-reduction contributions are based on salary earned
• A dollar-for-dollar match for each SRA program
from the effective date of the salary-reduction agreement
participant’s salary-reduction contribution for the
and thereafter. Salary-reduction contributions cannot be
plan year, up to 3% of his or her compensation.
based on compensation earned prior to the effective date.
— of less
less than
than 3%,
3%, but not
• A matching contribution
contribution—of
You are required to withhold salary-reduction contributions
— of each
each participant’s
participant’s compensation
less than 1%
1%—of
and deposit them in each participant’s SRA. If any
employee has not yet established an SRA, you are
with the current plan year).
required to establish one for that person. Contributions
deposit no later than 30 days after the last day of
the month in which the contributions were made.
Merrill Lynch SEP/SRA Contribution Ticket, which lists the
amount of each participant’s salary-reduction contribution
and his or her SRA account number. Once contributions
have been made, the trustee, custodian or issuer of each
participant’s SRA will process all investment directions and
distribution instructions, as well as completing the required
tax reporting in connection with the participant’s SRA.
• A 2% nonelective contribution.
If you elected to make the 2% nonelective contribution,
your contribution should be based on each participant’s
compensation up to $245,000 3 for 2010. This means that
the maximum nonelective contribution for any participant
would be $4,900 for 2010.
Use the E-Contribs Service to make contributions via the
internet at www.econtribs.ml.com. To enroll into the
1.888.637.8742.You
Youmay
may
E-Contribs Service please call 1888-637-8742.
with the SEP/SRA Contribution Ticket.
3
Make Your Employer Contribution
Finally, you are required to make an employer-matching or
nonelective
deadline, including extensions. Your employer contribution
year. (Refer to your Simple Retirement Account Program
Employer Notice sent to eligible employees before the
election period.)
5
For more information, please consult IRS, Publication 560 Retirement
Plans for Small Business. (SEP, SIMPLE and Qualified Plans available
at www.IRS.gov.)
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SIMPLE Retirement Account (SRA) Program
Sample Employee Letter
For your convenience, the sample letter below has been provided to help you communicate the availability of your new
retirement benefit to your employees.
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pend as
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Corporation or in which Bank of America Corporation has a substantial economic interest, including BofA™ Global Capital Management,
BlackRock and Nuveen Investments.
© 2010 Bank of America Corporation. All rights reserved.
28306
Code 205225PM-0610