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 Generic Forms (pdfs) 
Administration Websites
Questions & Answers for the Plan Sponsor.
 Compliance TestingIMPORTANT NOTICE AND DISCLAIMER: The compliance tests provided herein are based upon information and formulas believed to be accurate and complete, but there is no guarantee or warranty, stated or implied, as to the accuracy, completeness or applicability of these tests. These tests are based upon data supplied by the User, and may not meet User’s requirements, depending upon the factors and circumstances of the User’s plan. To assist the User in determining the fitness of the compliance tests herein, a description of each test is provided, plus the underlying methodology used to calculate test result.
I. Introduction-Historical Background (Answer)
II. Minimum Coverage Requirement (Answer)
III. Nondiscrimination Requirements (Answer)
-- Actual Deferral Percentage (ADP) Testing IV. Using Your Plan Administration Software to Run Compliance Tests (Answer)
-- End of Year Top Heavy Testing V. Correcting ADP or ACP Test Failures (Answer)
-- Correction BEFORE the End of the Plan Year VI. Option to Plan Testing: The Safe Harbor Method of Plan Administration (Answer)
-- Decision Deadlines VII. A Note About Plan Testing and Auto Enrollment (Answer)
 What is a safe harbor 401(k)
plan? (Answer) When can an employer adopt a safe harbor 401(k) plan?
(Answer) What employer contributions
are required to be made to a safe harbor 401(k) plan? (Answer) What requirements must be
met by a matching contribution in order to qualify for the safe harbor? (Answer) Can 401(k) Safe Harbor Plans Provide Matching
Contributions on Both Pre-Tax and After-Tax Employee Deferrals?
(Answer) Can Profit-Sharing Plans Add 401(k) Safe Harbor
Provisions During a Plan Year? (Answer) May matching contributions
be made on a discretionary basis in a safe harbor 401(k) plan under Code
Section 401(k) (12)? (Answer) Can other matching
contribution formulas satisfy the safe harbor? (Answer) Is there any other
restriction that applies to safe harbor formulas? (Answer) May an employer make other
contributions to a safe harbor 401(k) plan? (Answer) What conditions, if any, can
be placed on the receipt of the matching contribution or the 3 percent
nonelective contribution in a safe harbor 401(k) plan? (Answer) Are safe harbor 401(k) plans
exempt from the top-heavy rules? (Answer) What special vesting rules
apply to safe harbor 401(k) plans? (Answer) How much time does an
employer have before committing to Safe Harbor? (Answer) When can an employer
discontinue Safe Harbor? (Answer) Can Safe Harbor plans
provide for both pre-tax and after-tax contributions? (Answer) Can profit-sharing plans add
401(k) Safe Harbor during the plan year? (Answer) How does a Safe-Harbor Plan
compare with an Enhanced Match plan? (Answer) What is the "Safe
Harbor Notice" and where is it provided? (Answer) Sample Safe Harbor Notice. (Answer) What is required to qualify under safe
harbor matching? (Answer) In a Safe Harbor plan with enhanced matching, is there a maximum employer match? (Answer)
The employer matching contribution 401(k) plan safe harbor now satisfies the
top-heavy rules". Does this mean that if a 401(k)plan is a safe harbor
plan using the safe harbor matching contribution, they do not need to run the top heavy test?
(Answer) Are safe harbor 401(k) plans exempt from the requirement to run top-heavy tests? (Answer) A sole proprietor with 1 employee has a Safe Harbor plan, making the
matching safe harbor contributions. The one employee does not participate
in the plan, so would not receive the Safe Harbor match. Can the sole
proprietor give themselves the matching contribution? (Answer) If a 401(k) plan is a Safe Harbor plan, making the 3% of compensation
contribution, and they want to also have employer matching, can they only
match up to the first 6% of deferrals? Can they match 100% or more of the
first 6% of deferrals? (Answer) If an employer is going to use a fixed match in addition to the 3%
non-elective safe harbor contribution, does it have to be fully vested and
indicated as a safe harbor match? (Answer) The current 401(k) Pro, Inc. prototype plan or adoption agreement makes no mention of "safe harbor" in the documentation. Is that a problem for employers who wish to adopt safe-harbor plans? (Answer) What is a cross-tested 401(k) plan? (Answer) What is the advantage of a cross-tested 401(k) plan? (Answer) Must an employer make a contribution to a cross-tested 401(k) plan every year? (Answer) If a contribution amount passes the test in one year, will the same contribution pass the test in the subsequent year? (Answer) How is a cross-tested401(k) plan designed? (Answer) How many cross-testing methods exist? (Answer) Are my designated Roth contributions included in the 401(k) plan annual nondiscrimination testing? (Answer) If I am is required to take a corrective distribution from my 401(k) plan because the plan failed the ADP nondiscrimination test, can I take some or all of the corrective distribution from my designated Roth account? (Answer) Are designated Roth accounts included when determining whether a plan is top-heavy? (Answer) Does an employer have to pay Social Security and unemployment taxes on elective
deferrals made under a 401(k) plan? (Answer) What is the difference between a matching contribution and a qualified matching
contribution (QMAC)? (Answer) Other than elective and matching contributions, are there any other types of contributions to
a 401(k) plan? (Answer) Are there limits on the amount that an employer may deduct as contributions to a 401(k)
plan? (Answer) What does the term "vesting" mean?
(Answer) What happens to an employee's vesting schedule if he or she quits and is subsequently
rehired, say after a year? (Answer) Why might an employer choose
to make discretionary nonelective contributions to its 401(k) plan? (Answer) How does the employer make a
choice between allocating funds to matching contributions or
discretionary contributions? (Answer) How may qualified
nonelective contributions be used in a 401(k) plan? (Answer) What happens to forfeitures
under a 401(k) plan? (Answer) How are the limits
coordinated if the employer has a money purchase or target plan? (Answer) May matching contributions
be made on a discretionary basis in a safe harbor 401(k) plan under Code
Section 401(k) (12)? (Answer) What is a discretionary
nonelective contribution? (Answer) Can an employer contribute
unlisted stock or restricted stock in the 401(k)? (Answer) When a company's plan is top heavy and makes the 3% correctivecontribution, when must it be made by? Also, if the corrective contribution is made after the plan year, how is it included in the 5500? (Answer) What is
cliff vesting? (Answer) What is
graded vesting? (Answer) What are
Employee After-Tax Contributions? (Answer) What is an
Employer Matching Contribution? (Answer) What is the Maximum Employee
Contribution Percentage? (Answer) What is the Maximum Deferral
Limit? (Answer) What is a Non-Elective
Employer Contribution? (Answer) What is a Pre-Tax
Contribution? (Answer) What is the difference between the 415 limits for 401(k) plans (with an option of profit sharing) for 2001 and 2002. (Answer) If a participant's employment is terminated prior to the last day of the
Plan Year, is the employee automatically entitled to either matching or
profit sharing contributions? (Answer) What are the maximum
contribution limits for all DC plans from 2007-2012? (Answer) In a 401(k) plan with profit
sharing, if an eligible employee worked half-time (1000 hours), but
terminated employment before the year end, would the employee still
share in any profit sharing contributions at the end of the year even
though they terminated employment before December 31? (Answer) Can a plan amend the way in which they handle forfeitures, from "added to
employer contributions" to "used to reduce employer contributions"? (Answer) How are benefits paid from a 401(k) plan?
(Answer) What is the latest date that we must distribute an employee's 401(k) money?
(Answer) What is the earliest that employees are entitled to their
401(k) money without incurring penalties? (Answer) What is the earliest that employees are able to receive any distributions from a 401(k) plan?
(Answer) Do I have to get an employee's permission to make a distribution from
his or her account? (Answer) What happens if we terminate our 401(k) plan?
(Answer) Does an employer have to report an employee's 401(k) distribution to the IRS?
(Answer) If Employer A is sold to
Employer B, what happens to Employer A Is 401(k) plan? (Answer) What happens if the ADP test
for a plan year is not satisfied? (Answer) What is the tax treatment of
corrective distributions to employees? (Answer) What happens if a plan fails
to make a corrective distribution of excess aggregate contributions and
allocable income? (Answer) Are safe harbor employer
contributions and QNEC contributions (used to pass adp/acp tests)
available for 401(k) loans? (Answer) Is there a special exemption
for people who are 55+ and leave their job and want to take money from
their 401(k) without penalty? (Answer) Has the 20% back-up withholding been eliminated for hardship withdrawals? (Answer)
Does the 20% back-up withholding still apply to lump-sum distributions? (Answer)
Does the 20% back-up withholding still apply to all lump-sum distributions
from a 401(k) plan? (Answer) What is a
lump sum distribution? (Answer) What is
five-year forward averaging? (Answer) What
constitutes a disability? (Answer) How is a
hardship defined under the hardship withdrawal rules? (Answer) What is a QDRO? (Answer) What is a Stream-of-Payment
QDRO? (Answer) What is a Separate-Interest
QDRO? (Answer) What is the difference
between participant loans and hardship withdrawals? (Answer) Are there limits on the
amount that an employee is allowed to borrow? (Answer) When are participant loans
prohibited? (Answer) What happens if a loan is in
default? (Answer) What are guidelines for a
401(k) Loan? (Answer) Can a 401(k) be used as collateral for a independent loan? (In this question it is assumed the participant is NOT taking out a 401(k) loan, but instead "pledging" his/her 401(k) to a third-party lender). (Answer) If a participant's employment is terminated prior to the last day of the
Plan Year, is the employee automatically entitled to either matching or
profit sharing contributions? (Answer) If an employee terminates employment, can he/she take a distribution of their
401(k) assets, even if the individual returns to the company as a legitimate independent contractor? (Answer) What are the 3 basic exceptions to the 10% penalty for distributions from the 401(k) prior to age 59 1/2? (Answer) If a disabled employee has a certification of a Social Security Disability can
he/she avoid the mandatory 20% backup withholding associated wit a distribution? (Answer) When an employee terminates employment and takes a lump sum distribution,
what form is used to send with the 20% backup withholding which is sent to
the IRS? How soon after the distribution is made must this payment be
made? (Answer) What is a default IRA rollover? (Answer) If an employer processes a distribution for a terminated employee, and in
error rolls all of their accounts to another plan, forgetting to keep the
non-vested employer contributions, can the non-vested amount be retrieved
within a certain time period? (Answer)
Is it permissible to change the interest rate on a 401(k) loan? Example:
an employee took out a loan when prime was high. The employer would like to
now lower that rate to reflect the current market rate. (Answer) Must a bond be obtained for a 401(k) plan that has a bank trustee?
(Answer) Who must be covered by an
ERISA bond? (Answer) What is the purpose of
fiduciary liability insurance? (Answer) Must a bond be obtained for a 401(k) plan that has a bank trustee?
(Answer) What is the purpose of fiduciary liability insurance?
(Answer) Are ERISA bonds required for 401(k) Plans? (Answer)
Are ERISA bonds expensive?
Where do employers get ERISA bonds? (Answer)
What's the difference between an ERISA bond, a fidelity bond, and a fiduciary bond? (Answer)
How do fidelity bonds and ERISA or fiduciary bonds differ from errors & omissions insurance? (Answer)
What's the difference between errors & omissions insurance and fiduciary liability insurance? (Answer)
What are some typical investments that make up 401(k) plans?
(Answer) What kinds of companies offer investment management services for 401(k)
plans? (Answer) What are the Basic Guidelines For NASD Registered Reps and SEC Registered Investment Advisors Use of Our
Products? (Answer) Under what circumstances,
according to the DOL, can a service provider receive fees from mutual
funds without violating ERISAs self-dealing and anti-cutback provisions? (Answer) What should a 401(k) plan
investment policy cover? (Answer) Does self-directed brokerage
accounts comply with Section 404(c) with respect to instructing plan
fiduciary? (Answer) Should employer restrict
certain investment in self-directed accounts? (Answer) What is an Investment
Policy, and do our clients have one? (Answer) What is the difference
between a NASD-Registered Representative and an SEC-Registered
Investment Advisor? (Answer) How does a NASD-Registered Representative use Advisor 401(k)? (Answer)
How does a SEC-Registered Investment Advisor use 401(k) Easy? (Answer)
Does ERISA require Employers to provide investment information and
education to plan participants? (Answer) What is a
GIC? (Answer) What is a
BIC? (Answer) Can a bank or other investment provider offer certificates of deposit (CDs) in a 401(k) plan? (Answer) If a bank has part ownership of a brokerage company or a family
connection to a brokerage company, can they offer that brokerage as the only
investment option in a 401(k)? Can they offer it as one of two investment
options? (Answer) How and when is the accounting information for a 401(k) plan reported to
the IRS? (Answer) What information is reported on the Form 5500?
(Answer) Is there a penalty for failing to file the Form 5500?
(Answer) Does an employer have to report an employee's 401(k) distribution to the IRS?
(Answer) What must be included in a
SAR? (Answer) What are the audit
requirements for small 401(k) plans? (Answer) What is a "limited
scope" audit? (Answer) What are the audit
requirements for a large 401(k) plan? (Answer) Cross-Reference Charts IRS
Forms With Their Functions (Answer) If an employee terminates employment in
1999 and leaves his 401(k)account with a balance, is he still considered a "participant" on the 5500 in 2000?
(Answer) When a participant takes a
401(k) loan, how is it reported in the IRS 5500?
(Answer) What is required for IRS 5500 reporting for
403(b) plans?
(Answer)
When a company's plan is top heavy and makes the 3% correctivecontribution, when must it be made by? Also, if the corrective contribution is made after the plan year, how is it included in the 5500? (Answer) Is it true that there is no longer a 20% back-up withholding requirementrequired for 401(k) hardship withdrawals (Answer) Does the 20% back-up withholding still apply to all lump-sum distributions
from a 401(k) plan
(Answer) When an employee terminates employment and takes a lump sum distribution,
what form is used to send with the 20% backup withholding which is sent to
the IRS? How soon after the distribution is made must this payment be
made?
(Answer) Which states allow participants in a 401(k) plan to defer the state income
tax on their 401(k) deferrals?
(Answer) Who should serve as trustee of a 401(k) plan's assets? (Answer) May a 401(k) plan exclude
part-time employees from plan participation? (Answer) How do maternity or
paternity leaves of absence affect the determination of whether an
employee incurs a one-year break in service for purposes of eligibility? (Answer) What is a year of service? (Answer) Is a 401(k) plan permitted to disregard
any years of service when calculating a participant's vested percentage? (Answer) What are the available
document options for master and prototype plans? (Answer) What are the advantages and
disadvantages of standardized non-standardized plans? (Answer) Would a plan sponsor use a
master or prototype plan? (Answer) What should a 401(k) plan
investment policy cover? (Answer) Can an employer reduce or
eliminate its fiduciary liability for investment decision making by
giving participants investment control? (Answer) Who is an officer? (Answer) What are the basic limits
for a 401(k) plan? (Answer) Are there special limits
that apply to elective contributions? (Answer) What length of service
requirement may a 401(k) plan impose? (Answer) What is regional prototype plan? (Answer) What are the requirements
for regional prototype sponsors? (Answer) How does the format of a
regional prototype plan differ from that of a master or prototype plan? (Answer) What is a mass submitter
regional prototype? (Answer) What is the extent of 401(k) Pro's obligations to clients with respect to plan documentation consulting services? (Answer) What is a "document-related question" vs. a "non-document question" ? (Answer) Where does 401(k) Pro
personnel go for information about our Corbel prototype documents? (Answer) What is Social Security
Integration and do we recommend it? (Answer) Does selecting the Early
Retirement option in the Adoption Agreement create a potential problem
for our clients? (Answer) Beginning in 2002 can small companies (less than 100 employees) get a 50% tax credit (up to $500) on fees paid to set up a 401(k)? How many years is the credit deductible from taxes? (Answer)
What are the guidelines for the $500 to $1500 tax credit for new small plans? (Answer)
What are the procedures for changing a "fiscal year" plan prototype to a "calendar year" plan
prototype? (Answer) What person's name should appear as "Plan Administrator" in our software
AND in the registration section of our generic mutual fund applications? (Answer) If a 401(k) plan does not
exclude non resident aliens in their plan, can a student with a visa
participate in the plan? (Answer) Can we limit enrollment in our 401(k) plan to employees who have been
with the company for at least 18 months? (Answer) What is a cash or deferred election?
(Answer) Is there a limit on the amount of contributions that an employee can make to a 401(k)
plan? (Answer) What kinds of personnel-related information - such as participants'
names and Social Security numbers - should a 401(k) plan keep track of? (Answer) Is there an exception to the
anti-assignment rules for bankruptcy of the participant? (Answer) How do maternity or
paternity leaves of absence affect the determination of whether an
employee incurs a one-year break in service for purposes of eligibility? (Answer) What is a year of service? (Answer) Is a 401(k) plan permitted to disregard
any years of service when calculating a participant's vested percentage? (Answer) What is the maximum deferral
percentage in a 401(k) plan? (Answer) What is the maximum annual
amount deductible for a 401(k) plan? (Answer) Is there a limit on the
amount of compensation that may be taken into account in determining the
maximum deductible amount? (Answer) Can 401(k) plans accept after-tax contributions?
(Answer) What eligibility
requirements may be imposed on a 401(k) participant for purposes of
receiving a discretionary nonelective contribution allocation? (Answer) How much compensation can be
used for calculation plan contributions or benefits? (Answer) What are the basic limits
for a 401(k) plan? (Answer) Are there special limits
that apply to elective contributions? (Answer) What length of service
requirement may a 401(k) plan impose? (Answer) How do maternity or
paternity leaves of absence affect the determination of whether an
employee incurs a one-year break in service for purposes of vesting? (Answer) Under what circumstance will
the nonvested portion of a participant's account balance be forfeited? (Answer) What happens if the
participant's elective deferrals for the taxable year exceed the annual
cap? (Answer) What is the income allocable
to excess deferrals? (Answer) What happens if excess
deferrals are not corrected? (Answer) How does Code Section 415
limit annual additions to a 401(k) plan? (Answer) Is the $300,000 limit
indexed for inflation? (Answer) What is the maximum amount
of combined employee/employer funding that can be deferred on a pre-tax
basis in a participant's 401(k) on an annual basis? (Answer) Can a SIMPLE IRA be rolled
into a 401(k)? (Answer) Can employee salary
reductions and employer matching contributions made to a NON-qualified
plan be transferred to a 401(k) after the close of the plan year? (Answer) How much time does an employer have before 401(k) contributions must be deposited? (Answer)
Can an employee make a cash or deferred election in regard to a bonus that may not be paid
until several months in the future? (Answer) Are 401(k) participants eligible to contribute to private IRA accounts? (Answer) Can a plan be amended to make the length of service requirement longer? (Answer) If a 401(k) plan has a plan year of Jan-Dec, can an employee choose to
have payroll deferrals in January of 2002 apply towards his 2001 deferrals? (Answer) What does the term "constructive receipt" mean?
(Answer) I am self-employed. How much can I contribute to my 401(k)
plans? (Answer) Can a 401(k) plan be offered as part of a cafeteria plan?
(Answer) May a 401(k) plan exclude
part-time employees from plan participation? (Answer) What should a 401(k) plan
investment policy cover? (Answer) Can an employer reduce or
eliminate its fiduciary liability for investment decision making by
giving participants investment control? (Answer) Who is an officer? (Answer) What happens if a plan fails
to make a corrective distribution of excess aggregate contributions and
allocable income? (Answer) What is a discretionary
nonelective contribution? (Answer) Who is highly compensated
employees? (Answer) What must be included in a
SAR?
(Answer) What is the maximum amount
of combined employee/employer funding that can be deferred on a pre-tax
basis in a participant's 401(k) on an annual basis? (Answer) Are some business owners
prohibited from taking out 401(k) loans? (Answer) Who does the 401(k) audit
and what are the problems targeted in a 401(k) audit? (Answer) What are the two different
401(k) correction programs? (Answer) What do we say when we are
asked about a Payroll Interface? (Answer) How much money can the
employer contribute to employee's 401(k)? (Answer) What is the
separate accounting rule? (Answer) Do we have to allow employees to enroll as soon as they become eligible? (Answer)
Who should serve as trustee of a 401(k) plan's assets? (Answer) What is a fiduciary? (Answer) What is a named fiduciary? (Answer) What is the trustee's
responsibility? (Answer) What is the role of the
named fiduciary? (Answer) What is the role of the plan
trustee? (Answer) What is the role of the plan
administrator? (Answer) Can an outside financial or legal entity (i.e. bank, law firm, CPA, trustee company,
etc.) serve as trustee for a 401(k) ? (Answer) Under law how long must plan
administer or plan provider keep 401(k)-related records? (Answer) Do all states maintain 401(k) and other pension regulations and laws in
synch with federal pension laws? (Answer) |
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