Plan Provider Forms, Resources and Questions & Answers |
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| 401k Questions & Answers-- An online service for small businesses using the affordable, full-featured pc-based "run-it-yourself" 401(k) Easy (www.401k-easy.com) or the new, affordable, web-based version, 401(k) Easy Online (www.401-keasy-online.com) |
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Online 401K Plan Sponsor Guide
II. Online 401k Plan Participant Guide
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III.
Generic Forms (pdfs) |
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| L. | Formal Request For Cash Distribution For Age 59 1/2 AND UNDER |
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III. Administration Websites
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IV. Questions & Answers for the Plan Provider.
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| A. | Business Organization |
| B. | Compliance Testing |
| C. | Contributions & Vesting |
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D. |
Definitions & Glossary |
| E. | Distributions, Loans, Hardships, QDRO |
| F. | ERISA Bonds |
| G. | Investments |
| H. | IRS Tax Form Reporting |
| I. | Plan Documentation, Design & Setup |
| J. | Plan Operation: Plan Sponsor Issues |
| K. | Plan Operation: Plan Participant Issues |
| L. | Safe Harbor |
| M. | Responsiblities of Trustees & Fiduciaries |
| N. | Various DC Plans |
| O. | Recent Rules & Regulations Changes |
| * | A. Business Organization |
| 1. | If Employer A is sold to Employer B, what happens to the plan of Employer A? (Answer) |
| 2. | Can a public employer or a nonprofit entity offer a 401(k) plan? (Answer) |
| 3. | Are 401(k) plans appropriate for unincorporated businesses? (Answer) |
| 4. | What are the considerations in designing a 401(k) plan for a partnership? (Answer) |
| 5. | Qualified Separate Lines of Business (QSLOBs) (Answer) |
| 6. | What is a qualified separate line of business? (Answer) |
| 7. | What is a line of business? (Answer) |
| 8. | Must an LOB provide only on type or related types of property and services? (Answer) |
| 9. | What is a separate line of business? (Answer) |
| 10. | Must business entities under common control be aggregated as a single employer when applying the nondiscrimination and other qualification requirements? (Answer) |
| 11. | How many kinds of controlled groups are there? (Answer) |
| 12. | What is a controlling interest? (Answer) |
| 13. | What exactly is meant by "non-profits do not deduct their 401(k) contributions"? (Answer) |
| 14. | What is a successor plan? (Answer) |
| 15. | What is the purpose of the controlled group rules? (Answer) |
| 16. | What is an affiliated service group? (Answer) |
| 17. | What is a Related Employer? (Answer) |
| 18. | Can a non profit company have a 401(k) plan with profit sharing? (Answer) |
| 19. | Are there any special ERISA requirements (filings, reports, special amendments, etc.) for a tax-exempt organization? (Answer) |
| * | B. Compliance Testing |
| 1. | What is a highly compensated employee (HCE)? (Answer) |
| 2. | Do contributions to a 401(k) plan count as compensation? (Answer) |
| 3. | Must a 401(k) plan have a minimum number of employees participate? (Answer) |
| 4. | Can I set up a qualified 401(k) plan in which only executives can enroll? (Answer) |
| 5. | I am self-employed. How much can I contribute to my 401(k) plans? (Answer) |
| 6. | Our 401(k) plan failed the ADP test. Is there a way to adjust the plan so that it passes the test? (Answer) |
| 7. | What about correcting a 401(k) plan that failed the ACP test? (Answer) |
| 8. | We're a Taft-Hartley plan. How do we run the nondiscrimination tests? (Answer) |
| 9. | Does an employer have to report an employee's 401(k) distribution to the IRS? (Answer) |
| 10. | Can Year end "True-Up" Contributions Can Be Avoided? (Answer) |
| 11. | Can plans use electronic media to satisfy the 401(k) Safe Harbor Notice Requirement? (Answer) |
| 12. | May a 401(k) plan exclude part-time employees from plan participation? (Answer) |
| 13. | What is the maximum deferral percentage in a 401(k) plan? (Answer) |
| 14. | What is the maximum annual amount deductible for a 401(k) plan? (Answer) |
| 15. | Is there a limit on the amount of compensation that may be taken into account in determining the maximum deductible amount? (Answer) |
| 16. | How are the limits coordinated if the employer has a money purchase or target plan? (Answer) |
| 17. | Who is an officer? (Answer) |
| 18. | What happens if the ADP test for a plan year is not satisfied? (Answer) |
| 19. | What is the tax treatment of corrective distributions to employees? (Answer) |
| 20. | What happens if a plan fails to make a corrective distribution of excess aggregate contributions and allocable income? (Answer) |
| 21. | What eligibility requirements may be imposed on a 401(k) participant for purposes of receiving a discretionary nonelective contribution allocation? (Answer) |
| 22. | How much compensation can be used for calculation plan contributions or benefits? (Answer) |
| 23. | What are the basic limits for a 401(k) plan? (Answer) |
| 24. | Is the amount of elective contribution to a 401(k) plan subject to limitation? (Answer) |
| 25. | What happens if the participant's elective deferrals for the taxable year exceed the annual cap? (Answer) |
| 26. | What is the income allocable to excess deferrals? (Answer) |
| 27. | What happens if excess deferrals are not corrected? (Answer) |
| 28. | How does Code Section 415 limit annual additions to a 401(k) plan? (Answer) |
| 29. | Is the $30,000 limit indexed for inflation? (Answer) |
| 30. | Who is highly compensated employees? (Answer) |
| 31. | What are the maximum contribution limits for 2001? (Answer) |
| 32. | Is there a law that requires employers to make participant contribution deposits into the plan with a certain time frame? (Answer) |
| 33. | Who is considered a key employee? (Answer) |
| 34. | What special vesting requirements apply to top-heavy plans? (Answer) |
| 35. | What are the maximum contribution limits for all DC plans? (Answer) |
| 36. | Is there a new IRS ruling that states that employee salary reductions and employer matching contributions can be transferred to a 401(k) after the close of the plan year, and are treated as if made during the plan year? (Answer) |
| 37. | What is the Actual Contribution Percentage or ACP Test? (Answer) |
| 38. | What are the basic rules of the Actual Deferral Percentage or ADP Test? (Answer) |
| 39. | We regularly use "temps." Must I include them in our 401(k) coverage testing? (Answer) |
| 40. | Do sales commissions count as compensation? (Answer) |
| 41. | What is the ratio/percentage test? (Answer) |
| 42. | What is the average benefit test? (Answer) |
| 43. | Are corrective excess contributions tax-free? (Answer) |
| 44. | Our workforce is heavily unionized. How do I run the nondiscrimination tests? (Answer) |
| 45. | Is there any way to avoid ADP and ACP nondiscrimination testing? (Answer) |
| 46. | What are Annual Additions? (Answer) |
| 47. | What is a Annual Additions Limitation? (Answer) |
| 48. | What is a Determination Year? (Answer) |
| 49. | What is Gross Annual Compensation? (Answer) |
| 50. | What is a Key Employee? (Answer) |
| 51. | What is the Look Back Year? (Answer) |
| 52. | What is the Minimum Coverage Test? (Answer) |
| 53. | What is the Top -Paid Group or 20% HCE group? (Answer) |
| 54. | What is the Top Heavy Test? (Answer) |
| 55. | 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) |
| 56. | Can non-vested employer contributions be used towards passing the top-heavy test? (Answer) |
| 57. | What is the new EGTRRA definition of a "key employee" for purposes of the top-heavy test? (Answer) |
| 58. | What is the new EGTRRA definition of "officer" for top-heavy testing? (Answer) |
| 59. | Can an excess contribution under a plan's ADP test be "reclassified" as a catch up contribution for persons 50+ instead of distributing the excess? (Answer) |
| 60. | Can top-heavy plans offer a corrective contribution that can be subject to a vesting schedule? Does our 401(k) Easy system allow for this employer contribution to be vested? (Answer) |
| 61. | If an existing company starts a 401(k) how are the HCEs determined? (Answer) |
| 62. | If a brand new company starts a 401(k) how are the HCEs determined? (Answer) |
| C | C. Contributions & Vesting |
| 1. | Does an employer have to pay Social Security and unemployment taxes on elective deferrals made under a 401(k) plan? (Answer) |
| 2. | What is the difference between a matching contribution and a qualified matching contribution (QMAC)? (Answer) |
| 3. | Other than elective and matching contributions, are there any other types of contributions to a 401(k) plan? (Answer) |
| 4. | Are there limits on the amount that an employer may deduct as contributions to a 401(k) plan? (Answer) |
| 5. | What does the term "vesting" mean? (Answer) |
| 6. | What happens to an employee's vesting schedule if he or she quits and is subsequently rehired, say after a year? (Answer) |
| 7. | Why might an employer choose to make discretionary nonelective contributions to its 401(k) plan? (Answer) |
| 8. | How does the employer make a choice between allocating funds to matching contributions or discretionary contributions? (Answer) |
| 9. | How may qualified nonelective contributions be used in a 401(k) plan? (Answer) |
| 10. | What happens to forfeitures under a 401(k) plan? (Answer) |
| 11. | How are the limits coordinated if the employer has a money purchase or target plan? (Answer) |
| 12. | May matching contributions be made on a discretionary basis in a safe harbor 401(k) plan under Code Section 401(k) (12)? (Answer) |
| 13. | What is a discretionary nonelective contribution? (Answer) |
| 14. | Can an employer contribute unlisted stock or restricted stock in the 401(k)? (Answer) |
| 15. | When a company's plan is top heavy and makes the 3% corrective contribution, 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) |
| 16. | What is cliff vesting? (Answer) |
| 17. | What is graded vesting? (Answer) |
| 18. | What are Employee After-Tax Contributions? (Answer) |
| 19. | What is an Employer Matching Contribution? (Answer) |
| 20. | What is the Maximum Employee Contribution Percentage? (Answer) |
| 21. | What is the Maximum Deferral Limit? (Answer) |
| 22. | What is a Non-Elective Employer Contribution? (Answer) |
| 23. | What is a Pre-Tax Contribution? (Answer) |
| 24. | What is the difference between the 415 limits for 401(k) plans (with an option of profit sharing) for 2001 and 2002. (Answer) |
| 25. | 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) |
| 26. | What are the maximum contribution limits for all DC plans from 1996-2002? (Answer) |
| 27. | 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) |
| 28. | Can a plan amend the way in which they handle forfeitures, from "added to employer contributions" to "used to reduce employer contributions"? (Answer) |
| * | D. Definitions & Glossary |
| 1. | What is a cash or deferred arrangement (CODA)? (Answer) |
| 2. | What is an elective contribution? (Answer) |
| 3. | What is an eligible employee? (Answer) |
| 4. | What is an employee contribution? (Answer) |
| * | C. Distributions, Loans, Hardships, QDRO |
| 1. | How are benefits paid from a 401(k) plan? (Answer) |
| 2. | What is the latest date that we must distribute an employee's 401(k) money? (Answer) |
| 3. | What is the earliest that employees are entitled to their 401(k) money without incurring penalties? (Answer) |
| 4. | What is the earliest that employees are able to receive any distributions from a 401(k) plan? (Answer) |
| 5. | Do I have to get an employee's permission to make a distribution from his or her account? (Answer) |
| 6. | What happens if we terminate our 401(k) plan? (Answer) |
| 7. | Does an employer have to report an employee's 401(k) distribution to the IRS? (Answer) |
| 8. | If Employer A is sold to Employer B, what happens to Employer A Is 401(k) plan? (Answer) |
| 9. | What happens if the ADP test for a plan year is not satisfied? (Answer) |
| 10. | What is the tax treatment of corrective distributions to employees? (Answer) |
| 11. | What happens if a plan fails to make a corrective distribution of excess aggregate contributions and allocable income? (Answer) |
| 12. | Are safe harbor employer contributions and QNEC contributions (used to pass adp/acp tests) available for 401(k) loans? (Answer) |
| 13. | 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) |
| 14. | Has the 20% back-up withholding been eliminated for hardship withdrawals? (Answer) |
| 15. | Does the 20% back-up withholding still apply to lump-sum distributions? (Answer) |
| 16. | Does the 20% back-up withholding still apply to all lump-sum distributions from a 401(k) plan? (Answer) |
| 17. | What is a lump sum distribution? (Answer) |
| 18. | What is five-year forward averaging? (Answer) |
| 19. | What constitutes a disability? (Answer) |
| 20. | How is a hardship defined under the hardship withdrawal rules? (Answer) |
| 21. | What is a QDRO? (Answer) |
| 22. | What is a Stream-of-Payment QDRO? (Answer) |
| 23. | What is a Separate-Interest QDRO? (Answer) |
| 24. | What is the difference between participant loans and hardship withdrawals? (Answer) |
| 25. | Are there limits on the amount that an employee is allowed to borrow? (Answer) |
| 26. | When are participant loans prohibited? (Answer) |
| 27. | What happens if a loan is in default? (Answer) |
| 28. | What are guidelines for a 401(k) Loan? (Answer) |
| 29. | 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) |
| 30. | 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) |
| 31. | 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) |
| 32. | What are the 3 basic exceptions to the 10% penalty for distributions from the 401(k) prior to age 59 1/2? (Answer) |
| 33. | 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) |
| 34. | 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) |
| 35. | What is a default IRA rollover? (Answer) |
| 36. | 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) |
| 37. | 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) |
| * | F. ERISA BONDS |
| 1. | Must a bond be obtained for a 401(k) plan that has a bank trustee? (Answer) |
| 2. | Who must be covered by an ERISA bond? (Answer) |
| 3. | What is the purpose of fiduciary liability insurance? (Answer) |
| 4. | Must a bond be obtained for a 401(k) plan that has a bank trustee? (Answer) |
| 5. | What is the purpose of fiduciary liability insurance? (Answer) |
| 6. | Are ERISA bonds required for 401(k) Plans? (Answer) |
| 7. | Are ERISA bonds expensive? |
| 8. | Where do employers get ERISA bonds? (Answer) |
| 9. | What's the difference between an ERISA bond, a fidelity bond, and a fiduciary bond? (Answer) |
| 10. | How do fidelity bonds and ERISA or fiduciary bonds differ from errors & omissions insurance? (Answer) |
| 11. | What's the difference between errors & omissions insurance and fiduciary liability insurance? (Answer) |
| * | G. Investments |
| 1. | What are some typical investments that make up 401(k) plans? (Answer) |
| 2. | What kinds of companies offer investment management services for 401(k) plans? (Answer) |
| 3. | What are the Basic Guidelines For NASD Registered Reps and SEC Registered Investment Advisors Use of Our Products? (Answer) rrp |
| 4. | 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) |
| 5. | What should a 401(k) plan investment policy cover? (Answer) |
| 6. | Does self-directed brokerage accounts comply with Section 404(c) with respect to instructing plan fiduciary? (Answer) |
| 7. | Should employer restrict certain investment in self-directed accounts? (Answer) |
| 8. | What is an Investment Policy, and do our clients have one? (Answer) |
| 9. | What is the difference between a NASD-Registered Representative and an SEC-Registered Investment Advisor? (Answer) |
| 10. | How does a NASD-Registered Representative use Advisor 401(k)? (Answer) |
| 11. | How does a SEC-Registered Investment Advisor use 401(k) Easy? (Answer) |
| 12. | Does ERISA require Employers to provide investment information and education to plan participants? (Answer) |
| 13. | What is a GIC? (Answer) |
| 14. | What is a BIC? (Answer) |
| 15. | Can a bank or other investment provider offer certificates of deposit (CDs) in a 401(k) plan? (Answer) |
| 16. | 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) |
| * | H. IRS Tax Form Reporting |
| 1. | How and when is the accounting information for a 401(k) plan reported to the IRS? (Answer) |
| 2. | What information is reported on the Form 5500? (Answer) |
| 3. | Is there a penalty for failing to file the Form 5500? (Answer) |
| 4. | Does an employer have to report an employee's 401(k) distribution to the IRS? (Answer) |
| 5. | What must be included in a SAR? (Answer) |
| 6. | What are the audit requirements for small 401(k) plans? (Answer) |
| 7. | What is a "limited scope" audit? (Answer) |
| 8. | What are the audit requirements for a large 401(k) plan? (Answer) |
| 9. | Cross-Reference Charts IRS Forms With Their Functions (Answer) |
| 10. | 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) |
| 11. | When a participant takes a 401(k) loan, how is it reported in the IRS 5500? (Answer) |
| 12. | What is required for IRS 5500 reporting for 403(b) plans? (Answer) |
| 13. | When a company's plan is top heavy and makes the 3% corrective contribution, 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) |
| 14. | Is it true that there is no longer a 20% back-up withholding requirement required for 401(k) hardship withdrawals (Answer) |
| 15. | Does the 20% back-up withholding still apply to all lump-sum distributions from a 401(k) plan (Answer) |
| 16. | Instructions for handling Plan Administrator's nine-digit EIN (Employee Identification Number). (Answer) |
| 17. | 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) |
| 18. | Which states allow participants in a 401(k) plan to defer the state income tax on their 401(k) deferrals? (Answer) |
| * | I. Plan Documentation, Design & Setup |
| 1. | Who should serve as trustee of a 401(k) plan's assets? (Answer) |
| 2. | May a 401(k) plan exclude part-time employees from plan participation? (Answer) |
| 3. | 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) |
| 4. | What is a year of service? (Answer) |
| 5. | Is a 401(k) plan permitted to disregard any years of service when calculating a participant's vested percentage? (Answer) |
| 6. | What are the available document options for master and prototype plans? (Answer) |
| 7. | What are the advantages and disadvantages of standardized non-standardized plans? (Answer) |
| 8. | Would a plan sponsor use a master or prototype plan? (Answer) |
| 9. | What should a 401(k) plan investment policy cover? (Answer) |
| 10. | Can an employer reduce or eliminate its fiduciary liability for investment decision making by giving participants investment control? (Answer) |
| 11. | Who is an officer? (Answer) |
| 12. | What are the basic limits for a 401(k) plan? (Answer) |
| 13. | Are there special limits that apply to elective contributions? (Answer) |
| 14. | What length of service requirement may a 401(k) plan impose? (Answer) |
| 15. | What is regional prototype plan? (Answer) |
| 16. | What are the requirements for regional prototype sponsors? (Answer) |
| 17. | How does the format of a regional prototype plan differ from that of a master or prototype plan? (Answer) |
| 18. | What is a mass submitter regional prototype? (Answer) |
| 19. | What is the extent of 401(k) Pro's obligations to clients with respect to plan documentation consulting services? (Answer) |
| 20. | What is a "document-related question" vs. a "non-document question" ? (Answer) |
| 21. | Where does 401(k) Pro personnel go for information about our Corbel prototype documents? (Answer) |
| 22. | What is Social Security Integration and do we recommend it? (Answer) |
| 23. | Does selecting the Early Retirement option in the Adoption Agreement create a potential problem for our clients? (Answer) |
| 24. | 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) |
| 25. | What are the guidelines for the $500 to $1500 tax credit for new small plans? (Answer) |
| 26. | What are the procedures for changing a "fiscal year" plan prototype to a "calendar year" plan prototype? (Answer) |
| 27. | What person's name should appear as "Plan Administrator" in our software AND in the registration section of our generic mutual fund applications? (Answer) |
| 28. | 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) |
| * | J. Plan Operation: Sponsor Issues |
| 1. | Can we limit enrollment in our 401(k) plan to employees who have been with the company for at least 18 months? (Answer) |
| 2. | What is a cash or deferred election? (Answer) |
| 3. | Is there a limit on the amount of contributions that an employee can make to a 401(k) plan? (Answer) |
| 4. | What kinds of personnel-related information - such as participants' names and Social Security numbers - should a 401(k) plan keep track of? (Answer) |
| 5. | Is there an exception to the anti-assignment rules for bankruptcy of the participant? (Answer) |
| 6. | 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) |
| 7. | What is a year of service? (Answer) |
| 8. | Is a 401(k) plan permitted to disregard any years of service when calculating a participant's vested percentage? (Answer) |
| 9. | What is the maximum deferral percentage in a 401(k) plan? (Answer) |
| 10. | What is the maximum annual amount deductible for a 401(k) plan? (Answer) |
| 11. | Is there a limit on the amount of compensation that may be taken into account in determining the maximum deductible amount? (Answer) |
| 122. | Can 401(k) plans accept after-tax contributions? (Answer) |
| 13. | What eligibility requirements may be imposed on a 401(k) participant for purposes of receiving a discretionary nonelective contribution allocation? (Answer) |
| 14. | How much compensation can be used for calculation plan contributions or benefits? (Answer) |
| 15. | What are the basic limits for a 401(k) plan? (Answer) |
| 16. | Are there special limits that apply to elective contributions? (Answer) |
| 17. | What length of service requirement may a 401(k) plan impose? (Answer) |
| 18. | 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) |
| 19. | Under what circumstance will the nonvested portion of a participant's account balance be forfeited? (Answer) |
| 20. | What happens if the participant's elective deferrals for the taxable year exceed the annual cap? (Answer) |
| 21. | What is the income allocable to excess deferrals? (Answer) |
| 22. | What happens if excess deferrals are not corrected? (Answer) |
| 23. | How does Code Section 415 limit annual additions to a 401(k) plan? (Answer) |
| 24. | Is the $300,000 limit indexed for inflation? (Answer) |
| 25. | 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) |
| 26. | Can a SIMPLE IRA be rolled into a 401(k)? (Answer) |
| 27. | 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) |
| 28. | How much time does an employer have before 401(k) contributions must be deposited? (Answer) |
| 29. | 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) |
| 30. | Are 401(k) participants eligible to contribute to private IRA accounts? (Answer) |
| 31. | Can a plan be amended to make the length of service requirement longer? (Answer) |
| 32. | 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) |
| * | K. Plan Operation: Participant Issues |
| 1. | What does the term "constructive receipt" mean? (Answer) |
| 2. | I am self-employed. How much can I contribute to my 401(k) plans? (Answer) |
| 3. | Can a 401(k) plan be offered as part of a cafeteria plan? (Answer) |
| 4. | May a 401(k) plan exclude part-time employees from plan participation? (Answer) |
| 5. | What should a 401(k) plan investment policy cover? (Answer) |
| 6. | Can an employer reduce or eliminate its fiduciary liability for investment decision making by giving participants investment control? (Answer) |
| 7. | Who is an officer? (Answer) |
| 8. | What happens if a plan fails to make a corrective distribution of excess aggregate contributions and allocable income? (Answer) |
| 9. | What is a discretionary nonelective contribution? (Answer) |
| 10. | Who is highly compensated employees? (Answer) |
| 11. | What must be included in a SAR? (Answer) |
| 12. | 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) |
| 13. | Are some business owners prohibited from taking out 401(k) loans? (Answer) |
| 14. | Who does the 401(k) audit and what are the problems targeted in a 401(k) audit? (Answer) |
| 15. | What are the two different 401(k) correction programs? (Answer) |
| 16. | What do we say when we are asked about a Payroll Interface? (Answer) |
| 17. | How much money can the employer contribute to employee's 401(k)? (Answer) |
| 18. | What is the separate accounting rule? (Answer) |
| 19. | Do we have to allow employees to enroll as soon as they become eligible? (Answer) |
| * | L. Safe Harbor |
| 1. | Can 401(k) Safe Harbor Plans Provide Matching Contributions on Both Pre-Tax and After-Tax Employee Deferrals? (Answer) |
| 2. | Can Profit-Sharing Plans Add 401(k) Safe Harbor Provisions During a Plan Year? (Answer) |
| 3. | May matching contributions be made on a discretionary basis in a safe harbor 401(k) plan under Code Section 401(k) (12)? (Answer) |
| 4. | What is a safe harbor 401(k) plan? (Answer) |
| 5. | When can an employer adopt a safe harbor 401(k) plan? (Answer) |
| 6. | What employer contributions are required to be made to a safe harbor 401(k) plan? (Answer) |
| 7. | What requirements must be met by a matching contribution in order to qualify for the safe harbor? (Answer) |
| 8. | Can other matching contribution formulas satisfy the safe harbor? (Answer) |
| 9. | Is there any other restriction that applies to safe harbor formulas? (Answer) |
| 10. | May an employer make other contributions to a safe harbor 401(k) plan? (Answer) |
| 11. | 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) |
| 12. | Are safe harbor 401(k) plans exempt from the top-heavy rules? (Answer) |
| 13. | What special vesting rules apply to safe harbor 401(k) plans? (Answer) |
| 14. | How much time does an employer have before committing to Safe Harbor? (Answer) |
| 15. | When can an employer discontinue Safe Harbor? (Answer) |
| 16. | Can Safe Harbor plans provide for both pre-tax and after-tax contributions? (Answer) |
| 17. | Can profit-sharing plans add 401(k) Safe Harbor during the plan year? (Answer) |
| 18. | How does a Safe-Harbor Plan compare with an Enhanced Match plan? (Answer) |
| 19. | What is the "Safe Harbor Notice" and where is it provided? (Answer) |
| 20. | Sample Safe Harbor Notice. (Answer) |
| 21. | What is required to qualify under safe harbor matching? (Answer) |
| 22. | In a Safe Harbor plan with enhanced matching, is there a maximum employer match? (Answer) |
| 23. | 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) |
| 24. | Are safe harbor 401(k) plans exempt from the requirement to run top-heavy tests? (Answer) |
| 25. | 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) |
| 26. | 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) |
| 27. | 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) |
| 28. | 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) |
| * | M. Repsonsibilities of Trustees & Fiduciaries |
| 1. | Who should serve as trustee of a 401(k) plan's assets? (Answer) |
| 2. | What is a fiduciary? (Answer) |
| 3. | What is a named fiduciary? (Answer) |
| 4. | What is the trustee's responsibility? (Answer) |
| 5. | What is the role of the named fiduciary? (Answer) |
| 6. | What is the role of the plan trustee? (Answer) |
| 7. | What is the role of the plan administrator? (Answer) |
| 8. | Can an outside financial or legal entity (i.e. bank, law firm, CPA, trustee company, etc.) serve as trustee for a 401(k) ? (Answer) |
| 9. | Under law how long must plan administer or plan provider keep 401(k)-related records? (Answer) |
| N. Various DC Plans | |
| 1. | Small Business Retirement Savings Programs CHART |
| 2. | What are the advantages of in-house administration of a 401(k) plan? (Answer) |
| 3. | What is the difference between 401(k), 403(b) and 457 plans? (Answer) |
| 4. | What are the maximum contribution limits for all DC plans from 1996-2002? (Answer) |
| 5. | What is a Non-Qualified Retirement Plan? (Answer) |
| 6. | What is a SIMPLE-IRA? (Answer) |
| 7. | What is a Simplified Employee Pension or SEP? (Answer) |
| 8. | Can a SEP IRA be rolled into a 401(k) Plan? (Answer) |
| 9. | Can a non profit company have a 401(k) plan with profit sharing? (Answer) |
| 10. | Can a Simple Plan be converted into a standard 401(k) Plan? (Answer) |
| 11. | Can someone contribute to both a SEP and a 401(k)? Does this affect maximum contribution limits? (Answer) |
| 12. | Under the new laws, can a "rollover IRA" ($ rolled over from a 401(k)) be combined with a "contributory IRA" ($ which has come from regular IRA contributions)? (Answer) |
| 13. | Can a company have both a Keogh and a 401(k) plan? (Answer) |
| 14. | Can an employer have both a Defined Benefit Plan and a 401(k) Plan, which they would run as a Safe Harbor Plan? If they did run it as a Safe Harbor Plan, would they have to make the 3% of compensation contribution rather than the matching Safe Harbor contribution? (Answer) |
| * | O. Recent Rules & Regulations Changes |
| 1. | Economic Growth and Tax Reconciliation Act of 2001 (EGTRA) CHART |
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