December 2011

Dear %%f_name%%,

Sponsors of calendar-year single-employer retirement plans such as the Individual 401(k) and Profit Sharing Plan, have 2011 responsibilities and amendments that they must take care of by year-end.

Amendments

The Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) was signed into law on December 23, 2008, and gave economic relief to help employers and employees deal with the market downturn. WRERA provided relief from required minimum distributions (RMDs) for participants of defined contribution (DC) plans and is only effective for distributions required in the 2009 calendar year. For the 2009 calendar year, all DC prototype plan documents sponsored by Principal Trust Company operated to suspend all required minimum distributions as allowed by the WRERA. This suspension does not apply to installment payments (fixed period or fixed payment).

Principal Trust will mail a unilateral amendment to each plan sponsor by December 31, 2011. This amendment will also include changes made by the Small Business Jobs Act. Because the amendment is unilateral, no signature will be required.

Other Responsibilities

• Annual employer contributions for 2011 should be made as soon as administratively feasible.
• Any employer wishing to establish a qualified plan for the 2011 calendar year must adopt the plan by December 31.
• Required minimum distributions (RMDs) must be distributed by December 31, 2011, for certain participants age 70½ or older.
  • Distributions are required to begin April 1 of the calendar year following the later of the year in which a participant turns age 70½ or the year in which the participant retires or terminates; then annually by December 31 thereafter.
  • Participants who are 5 percent owners cannot defer their distributions until retirement or termination.
  • If there are multiple qualified plans, an RMD must be calculated and taken separately from each qualified plan.

• Principal Trust has notified plan sponsors of Money Purchase Pension Plans that we are discontinuing services for this plan type. Plan sponsors must make an election to terminate or transfer their plan. If an election was not made by December 15, 2011, it may be necessary for Principal Trust to resign as trustee of the plan.

Look Ahead to 2012

• Principal Trust will be sending out Compliance Administration Packages for calendar year Individual 401(k) Plans, and the Compliance Questionnaire for calendar year Profit Sharing and Money Purchase Pension Plans.
• Principal Trust will notify employers of Individual 401(k) plans that operate on a fiscal year of the deadline for testing of employee deferrals under Internal Revenue Code 402(g).
• Principal Trust will mail IRS Form 1099-R to participants who took a reportable distribution in 2011.
• Remember that Contribution Limits are changing for 2012.
  

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