The Trainer — February 2017
Charging Site Account for Frontline Retirement Plan Costs
In this month’s feature, we discussed how HUD lets you charge to your site’s operating account your contributions to retirement plans for frontline employees, as well as related administrative costs. But if your plan doesn’t meet the requirements of the HUD Management Agent Handbook, HUD auditors may order you to reimburse the site from your own pocket. We explained HUD’s nine retirement plan requirements.
QUESTION #1
Retirement account contributions for off-site employees, temporary help, and part-time on-site employees can’t be charged to the site’s operating account. True or false?
- True.
- False.
QUESTION #2
The retirement plan contributions you charge to the site account can’t exceed 5 percent of a worker’s base pay. True or false?
a. True.
b. False.
QUESTION #3
All contributions to the employee’s retirement plan must always belong to the employee. True or false?
a. True.
b. False.
QUESTION #4
Management agents with employees who split their work week among sites may charge employee retirement plan costs to site operations as long as the percentage of site funds paid to the management agent for the employee’s retirement plan contribution is proportional to the amount of time the employee works at each site. True or false?
a. True.
b. False.
ANSWERS & EXPLANATIONS
QUESTION #1
Correct answer: a
True. Only permanent, full-time employees may participate. HUD Handbook 4381.5, par. 6.38(e)(2)(b) states, “Only permanent, front-line employees who work full-time at the project (i.e., more than 20 hours per week) may participate. Temporary or part-time on-site employees are not eligible.”
QUESTION #2
Correct answer: b
False. The cap for contributions is 10 percent of a worker’s pay. HUD says the dollar amount of the contributions you charge to the site operating account “may not exceed ten percent of the base pay of eligible employees” [HUD Handbook 4381.5, par. 6.38 (e)(2)(c)].
QUESTION #3
Correct answer: b
False. Employee contributions must always belong to the employee, but your contributions should belong to the employee in five years. When some or all of the contributions “vest,” the vested portion becomes the employee’s property. Employees who leave their job before your contributions for them are 100 percent vested forfeit the portion that isn’t yet vested. HUD says the frontline employee is to be vested ownership of no less than 20 percent of the employer’s contribution each year until fully vested. Therefore, employees must be fully vested after five full years of employment [HUD Handbook 4381.5, par. 6.38 (e)(2)(d)].
QUESTION #4
Correct answer: a
True. In HUD Notice H 2011-08, HUD clarified how to handle the common practice for employees to work at several sites performing frontline tasks throughout the work week. It’s important to note, however, that these costs paid from site operating accounts are for on-site, frontline employees who work at the sites on a daily basis only, and do not apply to off-site, non-frontline supervisors.