401(K) Administration and Services Agreement Terms and Conditions
This Agreement is a contract between Guidant Financial Group, Inc. (GFG) and the Employer, and sets the terms and
conditions pursuant to which GFG will provide 401(k) administration services to the 401(k) retirement plan of the Employer.
1. EFFECTIVE DATE AND TERM:
This Agreement shall be in effect as of the Effective Date of the Plan. The “Effective Date” of the Plan is generally one
calendar day after the Employer (the Corporation) is recognized by the Secretary of State or other governing body. This
Agreement shall continue in full force and effect indefinitely until terminated as provided in Section 5 of this Agreement.
2.1 – General:
(a) GFG is the designated Third Party Administrator (TPA) for the Plan. GFG reserves the right to subcontract the
401(k) administration services (“Services”) described herein to any other TPA professional of GFG’s choosing, in GFG’s
sole discretion. In the event GFG subcontracts the Service, this Agreement shall remain in full force and effect (unless
otherwise terminated by a party pursuant to Section 5).
(b) GFG will provide to the Plan the Services set forth in the 401(k) Administration and Services Agreement, and these
Terms and Conditions. Any additional services must be mutually agreed to in writing by both the parties. A description
of the specific responsibilities of GFG is set forth on ‘401(k) Administration and Services Agreement’. A description of the specific responsibilities of Employer is set forth on ‘Employer 401(k) Plan Responsibilities’. GFG and Employer agree to
perform the tasks for which each is responsible according to this Agreement.
(c) GFG will act only upon the instructions of Employer. Employer is responsible for thoroughly reviewing the Plan
documents, taking all necessary actions to adopt the Plan, maintaining the qualified status of the Plan under the
Employee Retirement Income Security Act (“ERISA”), as now existing or hereafter amended and federal tax law, and
performing all other Employer duties set forth in this Agreement.
(d) Employer acknowledges that GFG cannot properly provide the Services without Employer providing the prescribed
information to GFG. Employer agrees to provide complete, accurate, and timely information and approvals in the
manner and within the time frames reasonably requested by GFG. GFG will generate plan documents and annual
reports, and perform the Services described herein based solely on the information supplied by Employer using the
documents and information-gathering tools provided by or approved by GFG.
(e) GFG shall not have access to Plan assets nor shall it have discretionary authority or control over the management
of the Plan or Plan assets. GFG is not an investment advisor for any of the plan assets and will not provide investment
advice for any plan assets.
2.2 – Plan Document Services: GFG shall be responsible for accurate and timely preparation of IRS and DOL reporting
forms upon receipt of complete information from Employer. Employer agrees to return documents required 60 days
prior to the due date of such required forms. GFG shall be responsible for delivering the forms to the Employer for review and filing. Such delivery will occur via electronic transmission.
2.3 – Other Responsibilities:
(a) Employer acknowledges and agrees that GFG is not the “Plan Administrator” nor is GFG a “fiduciary,” as those terms are defined in ERISA. GFG shall not be deemed to be providing legal, investment, or tax advice to Employer pursuant to this Agreement, and Employer agrees to obtain from third parties such legal, investment and tax advice such as the
Plan may require.
(b) GFG shall not be responsible for payment of any federal, state or other taxes or penalties which may be charged
against the Plan, Employer or other parties to the Plan. GFG shall not be responsible for filing notices of any taxable or
otherwise reportable events as defined under applicable law, nor will GFG be liable in any manner for any failure by Employer to file accurate reports with the IRS or Department of Labor (“DOL”) in a timely manner or for Employer’s responsibilities (outlined in this Agreement).
(c) GFG may, at the direction of Employer, provide the Employer’s financial advisor, broker of record, attorney and
GFG’s subcontractor with information regarding the Plan and Plan participants. GFG may release any information or documentation related to Employer, the Plan and Plan participants as requested by the IRS, the DOL, or any other
regulatory or judicial authority.
2.4 – Incomplete or Inaccurate Information – GFG is dependent upon the completeness and accuracy of all information provided to GFG by Employer. GFG shall not be responsible for any errors, delays, or additional costs
resulting from the receipt of incomplete, inaccurate, or untimely information from Employer
3. FEES AND EXPENSES:
3.1 – Fees Payable by Employer – Employer agrees to pay GFG the fees (“Fees”) set forth on the 401(k) Administration 401(k) Administration Services and Fees. GFG reserves the right to modify the administration fees not less than 30 days’ notice to Employer.
3.2 – Fees for Additional Services – Employer acknowledges and agrees that the Fees as described on the Pension 401(k) Administration Services and Fees are based upon Employer’s compliance with all reasonable practices and procedures set forth by GFG, and that Employer may be responsible for the payment of additional fees to GFG if Employer deviates from the practices and procedures of GFG. If Employer fails to provide GFG with all necessary, accurate and complete information required at least 60 days prior to the non-extended IRS Form 5500 filing deadline so as to enable GFG to prepare a timely filed Form 5500, then Employer shall be deemed to consent to the preparation and filing by GFG of a Form 5558 (“Application for Extension of Time to File Certain Employee Plan Returns”) on Employer’s behalf for which the fee shall be $129.00. GFG retains the right in the exercise of GFG’s sole management discretion to waive the Form 5558 fee if the facts and circumstances so warrant. If it should become necessary to repeat any service due to incomplete and/or inaccurate information as presented by Employer or by any other person or entity having responsibilities with respect to Employer or the plan, GFG shall be entitled to charge for any repeat service.
3.3 – Nonpayment of Fees by Employer – Employer expressly acknowledges and agrees that if Employer does not pay an invoice in full when due, GFG reserves the right to discontinue providing any or all of the Services and terminate this Agreement. In the event that Employer fails to pay Fees when due, and GFG pursues a collection against Employer, Employer will pay GFG’s reasonable attorney’s fees and expenses for such collection. GFG will be entitled to charge up to the maximum interest rate as allowed by law on any past-due Fees.
3.4 – Bankruptcy/ Dissolution – In the event Employer becomes the debtor in a voluntary or involuntary bankruptcy
or insolvency proceeding, the parties agree that upon the filing of such proceeding this Agreement will be considered an executory contract under 11 U.S.C. Section 365, as now existing or hereafter amended, and that any pre-petition arrearage under this Agreement must be paid in full if the Agreement is to be assumed. However, GFG reserves the right to withhold its consent to such assumption of the executory contract. In the event of dissolution by Employer under state law, the parties agree GFG will not provide any Services without first receiving payment for such Services. GFG will not provide any 401(k) Administration Services related to or as a result of such bankruptcy or insolvency proceeding, unless mutually agreed to, in writing. The parties agree that GFG is entitled to recover GFG’s reasonable attorney’s fees and expenses associated with representing GFG in a bankruptcy or dissolution proceeding
4. INDEMNIFICATION AND LIMITATION OF LIABILITY:
a) Employer will be liable for and indemnify GFG, its officers, agents, servants, directors, shareholders, employees and attorneys (including corporate General and Associate General Counsel), subsidiaries, and affiliates (collectively, the “Indemnitees”) against all losses, damages, penalties, liabilities, costs and expenses, including without limitation, reasonable attorneys’ fees, suffered or incurred by an Indemnitee to the extent based on or arising out of a breach of any of Employer’s representations, warranties or covenants set forth in this Agreement or Employer’s negligence or willful misconduct.
(b) GFG SHALL NOT BE LIABLE TO EMPLOYER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING LOST REVENUE, LOST PROFITS AND LOST OR DAMAGED DATA, EVEN IF GFG WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(c) IN NO EVENT WILL THE AGGREGATE LIABILITY OF GFG UNDER THIS AGREEMENT FOR ALL DAMAGES PERMITTED UNDER THIS AGREEMENT EXCEED THE ANNUAL SERVICE FEE PAID BY EMPLOYER TO GFG DURING THE 12 MONTHS BEFORE GFG RECEIVES WRITTEN NOTICE OF THE FIRST DAMAGES CLAIM. THIS LIMITATION ON THE LIABILITY OF GFG AND ITS INDEMNITIES FOR PERMITTED DAMAGES WILL NOT APPLY TO PERMITTED DAMAGES CAUSED BY THE FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF GFG AND ITS INDEMNITIES.
(d) Upon Employer’s receipt of any reports or written communications from GFG or GFG’s subcontractor, Employer must notify GFG in writing of all inaccuracies and errors reflected in such reports or communications, with a complete description of the inaccuracies or errors, within the time allowed or within 30 days, whichever occurs first, after Employer’s receipt of such report or communication. After the time allowed or within 30 days, whichever occurs first, the information provided in such reports and communications will be deemed correct, and GFG shall have no responsibility for any inaccuracies or errors that may exist, including any responsibility to correct any records or to make the Plan or the affected participants whole for any investment losses or any other consequences resulting from such inaccuracies or errors.
5.1 – Events of Termination: This Agreement may be terminated:
(a) By either party upon at least 30 days prior written notice to the other party; or
(b) By either party immediately if the other party commits a material breach of this Agreement and does not cure such breach within 30 days after receiving written notice of the breach from the non-breaching party; or
(c) By GFG if Employer fails to comply with all reasonable practices and procedures or fails to pay applicable Fees.
(d) By GFG immediately upon written notice to Employer if Employer is administering or operating the Plan in a manner inconsistent with the plan documents, or if Employer engages in activities which GFG reasonably believes to be illegal or a violation of the intellectual property rights of GFG.
5.2 – Termination of the Plan –
(a) GFG Services – During the term of this Agreement, if Employer causes or permits the Plan to terminate, GFG, upon the written request of Employer, will prepare the final Form 5500 for Employer, provided that Employer supplies GFG with prompt notice of the effective date of such termination. Thereafter GFG will prepare the final Form 5500 if Employer provides the complete information necessary to prepare such Form at least 60 days prior to the due date of such required forms.
(b) Termination of Prototype Plan Sponsorship – In the event this Agreement is terminated by either party, GFG will no longer serve as the Prototype Plan Sponsor of the plan. In this event, Employer must obtain a new Prototype Plan Sponsor capable of supporting Qualified Employer Securities or operate the Plan as an individually- designed plan at Employers own expense. Without a Prototype Plan or an IRS approved individually-designed plan, Employer’s Plan may become disqualified, resulting in tax consequences for both Employer and Participants. GFG will no longer provide amendments to the Plan Adoption Agreement as may be required by law from time to time
6. PLAN PROTECTION
6.1 – Subject to the conditions noted below, GFG will provide Plan Protection to its current 401(k) administration clients in the event of an IRS or DOL audit on the corporation’s 401(k) Plan.
6.2 – Audit Defined: For purposes of this Plan Protection program, the term “Audit” means any examination, investigation, review, written communication or notice of a proposed adjustment of federal taxation initiated by the Internal Revenue Service (IRS) or U.S. Department of Labor (DOL) of the corporation’s 401(k) retirement plan (the Plan). Plan Protection is not provided for Audits initiated against the corporation or any of its individual officers, directors, or employees unless such Audit expands to include the Plan. Further, Plan Protection is not provided for any Audits initiated by state or local agencies.
6.3 – Scope of Plan Protection; Legal Counsel to be Provided:Plan Protection consists of (a) the retention, at GFG’s expense, of qualified legal counsel, to be selected by GFG, to represent the Plan in the event of an IRS or DOL Audit; and (b) the assistance of GFG’s internal staff to provide 401(k) plan administration documentation on file to the legal counsel. GFG shall not be liable for payment of any fees or expenses incurred by Client’s engagement of a CPA or other legal or accounting professionals in addition to the legal counsel provided by the Plan Protection program.In the event of an audit that is initiated on a person or entity other than the Plan and that later expands to include the Plan, GFG will provide Plan Protection only for that portion of the Audit that is directed against the Plan. GFG shall have no liability for any fines, penalties, taxes or surcharges that may be assessed against the Plan or its fiduciaries as a result of the Audit.
6.4 – GFG’s Management Discretion to Provide Plan Protection on Matters Outside the Stated Scope: GFG may, in the exercise of its sole management discretion, provide Plan Protection for matters that fall outside the stated scope of support. To that end, Clients are encouraged to notify GFG immediately upon receipt of any IRS or DOL communication to allow GFG to evaluate the situation and to decide whether to exercise its discretion to provide Plan Protection on a matter that is outside the scope of coverage.
6.5 – Conditions for Plan Protection to Attach:
If the communication from the IRS is in regards to rollover of funds in to the plan, specifically communication stemming from Form 1099-R, then GFG is not obligated to provide Plan Protection. GFG staff may provide non-legal suggestions to the Client for possible corrective action that Client can take individually or with Client’s own legal or tax professional to address the matter with the IRS. GFG’s suggestions should not be construed as legal or tax advice.If the Audit is initiated due to a prohibited transaction committed by the Client, whether reported on the Form 5500 or not, GFG is not obligated to provide Plan Protection. Client must be a current GFG 401(k) Plan Administration Client who is current in all fees that are due and owing to GFG at the initiation of the Audit and must remain current in payment of fees throughout the pendency of the Audit. Client must have corrected any deficiencies noted by GFG’s 401(k) Administration Department in the Plan Report submitted to Client for current or prior plan years. Client will be required to sign a letter of engagement and a Form 2848 with the legal counsel to enable the attorney to represent the Plan. Client must cooperate with legal counsel and with GFG, be responsive to communications from legal counsel and GFG, and provide legal counsel with timely and accurate information as requested.
6.6 – Limitation on Appeals to U.S. Tax Court: Any decision to appeal an adverse administrative ruling to the U.S. Tax Court or any other federal court at GFG’s expense rests solely within the discretion of GFG.
6.7 – Right to Terminate Provision of Legal Counsel in Event of Conflict of Interest: The attorneys that GFG selects to provide Plan Protection retain the right to terminate representation of the Client’s Plan in the event of ethically impermissible conflict of interest between Client and GFG, as provided in the applicable Rules of Professional Conduct. If the attorneys do withdraw from representation of the Plan because of a conflict of interest, this Audit Support obligation is terminated and GFG is under no duty to provide replacement legal counsel at its expense.
6.8 – Right to Amend Terms of Plan Protection Program: GFG reserves the right to amend the terms of its Plan Protection Program upon prior notice to the Client in accordance with the terms of Client’s Pension 401(k) Plan Administration Agreement.
GFG reserves the right, in the exercise of its sole management discretion, to terminate Plan Protection if Client engages in illegal conduct, is non-cooperative with Legal Counsel who is representing Client, and/or fails to stay current on 401(k) Administration fees
7. Outside Counsel
The one (1) hour of assistance with outside legal counsel specified in the Agreement is subject to the following:
7.1 – Scope and Procedure of Outside Counsel Referral: In order to qualify for the GFG-paid referral to outside counsel under the provisions of the 401(k) Plan Administration Agreement, the subject matter of the referral must “relate” to Client’s 401(k) plan and be with respect to legal compliance with IRS and DOL rules and regulations. For matters that relate to the Client’s 401(k) plan, the procedure is for the Client to contact GFG’s 401(k) Administration department, explain the situation, and request referral. GFG will then make a determination whether the matter in question relates to the 401(k) plan’s compliance, is something that an outside legal counsel is needed to advise on the matter. If that is
true, GFG will refer the client to one of the attorneys who are participating in GFG’s outside counsel referral panel. The attorney to whom the matter is referred may or may not be the same attorney with whom Client held consultations as part of the initial setup of Client’s product.
7.2 – Matters That Exceed 1.0 Hour of Consultation Time: Matters that are within the Scope of Referral may take more than 1.0 hour of consultation time with the attorney. If the matter that is being referred involves consultations in excess of 1.0 hour, Client is responsible for the expense of the excess consultation time, and will work with attorney directly on any additional fees.
7.3 – Matters Outside the Scope of Referral: If a matter falls outside the scope of referral, the Client can retain outside counsel at Client’s expense, and GFG will facilitate such a referral. GFG retains the sole discretion to determine whether a legal matter is sufficiently “related” to Client’s 401(k) plan to fall within the GFG-paid 401(k) Plan Administration Agreement referral. In no event will outside counsel consult with Client on a matter of state law for a state in which the attorney is not licensed.
7.4 – GFG’s Management Discretion to Provide GFG-Paid Outside Counsel Referral on Matters Outside the Stated Scope: GFG reserves the right, in the exercise of its sole management discretion, to provide a referral at its expense for matters that fall outside the stated scope of support. To that end, Clients are encouraged to notify GFG immediately of any legal issues that involve any aspect of their 401(k) rollover product to allow GFG to evaluate the situation and to decide whether to exercise its discretion to provide a GFG-paid outside counsel referral on a matter that is outside the scope of coverage.
8. OTHER PROVISIONS:
8.1 – Force Majeure: GFG will not be liable for, nor will GFG be considered in breach of this Agreement due to, any failure or delay in performance of its obligations under this Agreement as a result of a cause beyond its reasonable control including, but not limited to, any act of God or public enemy, act of any military, civil or regulatory authority, any act of terrorism, change in any law or regulation, fire, flood, tornado, earthquake, storm or other like event, disruption or outage of computers or communications, equipment failure, power or other utility failure, labor strikes, exchange action, unusual trading activity or the suspension or disruption of trading on any exchange.
8.2 – Copyrighted Works: Employer acknowledges that GFG is the sole copyright owner of all GFG TPA’s guides, the operations forms, and all other materials provided under the terms of this Agreement. GFG grants Employer a nonexclusive, nontransferable right to copy the forms as needed for the sole purpose of collecting and processing participant information. Similarly, Employer acknowledges that GFG is the sole copyright owner of all pension related materials created by GFG or bearing GFG’s letterhead or logo, all content on the GFG web site and all other GFG-created materials provided under the terms of this Agreement
8.3 – Notices: Any notice required under this Agreement must be in writing to the address or email address of record, and must be addressed to the parties as follows:
If to Employer: The current address or email address for Employer in GFG’s records;
If to GFG:
Guidant Financial Group, Inc.
1100 112th Ave NE, Suite 100
Bellevue, WA 98004
GFG reserves the right to use electronic services such as email, internet, phone and facsimile as a means to request and transmit information to Employer. Employer may use same electronic services unless directed otherwise by GFG. If directed otherwise, Employer is obligated to transmit information via the means requested. Employer is required to provide GFG with a valid email address for communication, and to update GFG should Employer’s email address change.
8.4 – Record Retention: Employer acknowledges and agrees that it is expressly responsible for the retention of all records related to the Plan. GFG will retain IRS required reports for 3 years after each such report has been filed.
8.5 – Amendment and Modification – Employer may not amend or modify this Agreement except in a writing signed by both parties. GFG may amend and modify this Agreement from time to time by providing written notice to Employer. Employer will be deemed to have agreed to GFG’s amendment(s) or modification(s) unless Employer objects in writing to any such amendment or modification and promptly exercises its termination rights under this Agreement.
8.6 – Original Documents: The parties may transmit any document or signature via facsimile, electronic signature, or email, and any document or signature so transmitted shall be treated as an original for all purposes.
8.7 – Waiver: In the event any provision of this Agreement is not enforceable in any jurisdiction, the remainder of this Agreement will not be affected thereby.
8.8 – Applicable Law and Venue: The validity, construction and interpretation of this Agreement will be governed by the laws of the State of Washington, without regard to Washington’s conflict of law principles. The State of Washington, County of King, has exclusive jurisdiction and venue over any claim or other action pertaining to or arising out of this Agreement.
8.9 – Time Limit for Bringing Claim or Action: Any claim made or action brought under this Agreement must be commenced within 24 months after the act which caused the error or inaccuracy occurred. If this time limitation is prohibited by Washington law, the 24-month period will be deemed amended to conform to the minimum period permitted by Washington law.
8.10 – Authority of Employer: Employer warrants it is legally authorized to enter into this Agreement on behalf of the Plan.
8.11 – Entire Agreement: This Agreement supersedes all prior agreements and understandings, written, electronic or oral, between the parties with respect to the subject matter of this Agreement, and this Agreement constitutes the entire agreement between the parties with respect to its subject matter.
8.12 – Successors and Assigns: Employer may not assign its rights or delegate its duties under this Agreement without GFG’s prior written consent. This Agreement will be binding upon each party’s successors and permitted assigns.