Contribution Payments to the Fund

Contribution Payments to the fund

ERISA Regulations

The YMCA Retirement Fund sponsors two plans: The 401(a) Retirement Plan and the 403(b) Savings Plan. In 2004, the YMCA Retirement Fund was successful in having federal legislation enacted which protects important aspects of our plans:

• Recognition of our plans as church plans,
• The right to continue commingling the assets of the 401(a) Retirement Plan with those of our 403(b) Savings Plan for investment efficiency purposes, and
• Permission to continue to convert participant account balances into life annuities for retiring employees (known as self-annuitization, which only defined contribution church plans can do).

As a result of the legislation’s enactment, effective July 1, 2006, the Retirement Plan elected into certain provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

What YMCAs Need To Do

YMCAs should remit contributions as soon as reasonably possible after each payroll.

To comply with the Department of Labor (DOL) regulations under ERISA and the terms of the 401(a) Retirement Plan, YMCAs are required to remit employee-withheld contributions to the Fund as soon as contributions can reasonably be segregated from the YMCA’s general assets following the date that amounts are withheld from employee paychecks. For both the 401(a) Retirement Plan and 403(b) Savings Plan, in no event may employee-withheld contributions be remitted later than the 15th business day of the month following the month in which amounts would otherwise have been payable to the employee.

For example, if contributions are withheld from employee paychecks on July 15, the YMCA is required to remit such employee contributions to the Fund as soon as reasonably possible but no later than the 15th business day of August. The “as soon as reasonably possible” standard will depend upon the facts and circumstances of a particular YMCA, including whether it has electronic payroll systems and computer capabilities or manual systems to transmit contributions, as well as the number of YMCA branches that need to be coordinated and whether an outside payroll provider is utilized.

401(a) Retirement Plan contributions withheld from an employee’s pay are considered plan assets by the DOL at the time contributions can reasonably be segregated from the YMCA’s general assets and cannot be diverted for any purpose other than to be remitted to the Fund to be credited to the employee’s accounts under the 401(a) Retirement Plan for the exclusive benefit of the employee.

If Employee-Withheld Contributions Are Not Remitted ASAP

If employee-withheld contributions are not remitted to the Retirement Fund on time per DOL regulations, it may be viewed as a “prohibited transaction.” The method to correct such a prohibited transaction is by undoing the transaction by contributing the employee amounts and related earnings. In addition, the YMCA may need to report the transaction to the IRS on IRS Form 5330 and 15% excise tax penalty and other penalties may be due. The Fund will be required to report late contributions to the IRS on the annual information return Form 5550 filed for the Retirement Plan.

Failure to correct the prohibited transaction, to file the IRS Form 5330 and to pay the penalty tax by the time it is due, or by the time a deficiency notice is mailed by the IRS, may subject the YMCA to a 100% excise tax penalty. Using Plan assets for any other purpose, including the cash flow needs of the employer, could result in criminal liability.

Under DOL regulations, a 10-business day extension may be available if certain specific requirements are met, including notifying all participants, obtaining a performance bond and providing the DOL with a copy of the notice and certification that the bond was obtained.

• Employer Contributions are due on the 15th business day. Employer contributions by YMCAs to the Retirement Plan must be sent to the Fund by the 15th business day after the end of the month to which such employer contributions relate. If a YMCA fails to remit employer contributions in a timely manner, the YMCA must pay all contributions plus interest (at the applicable interest rates) to the Fund. In addition, there may be a related filing requirement and fees or penalties.
• Failure to comply may result in expulsion. Failure to comply with the timely remittance of either employee-withheld contributions or employer contributions to the Fund could result in appropriate action being taken against a non-complying YMCA, including expulsion from participation in the plans of the Fund.

Payment Timeliness

Print the Transmittal Calendar for YMCAs to be sure your payments are on time.

Ys With Past Due Contributions

Ys that have past due amounts will receive a statement from the Fund. Letters will be sent to the delinquent Y’s CEO, CFO and CVO. In addition, these delinquencies are reported to Y-USA Network Consultants. This sharing of information is to alert national staff about Ys that might be having financial difficulties. On occasion, the Fund’s internal audit staff will conduct on-site reviews to assess a Y’s compliance with government and Fund rules.

Contact the Fund’s Finance Department immediately to discuss options if your Y is having difficulty complying with these rules. Continual non-payment of contributions can result in expulsion from the Plan.