FAQ
Plan SponsorsPLAN SPONSORS
How soon must I deposit contributions deducted from employees into their 401k account?
Government regulations require that participant contributions to a 401k be deposited to the plan on the earliest date that they can be reasonably segregated from the employer's general assets, but in no event may they be deposited later than the 15th business day of the month following the month in which the participant contributions are deducted from their pay. What this DOESN'T mean is that you can wait until the 15th business day of the month following the month in which the contribution was deducted just for the convenience of doing so. If you can deposit the funds in one or two days, you must do so.
Do I have to report all my employees to you?
Yes. Form 5500 and the Schedule R require you to answer questions about all your employees, not just the ones that met the eligibility requirements of your plan.
Why do I have to report the hours each employee worked to you?
IRS Discrimination testing divides employees up into three groups, those that work 1,000 or more hours in a year, those that work 500 - 999 hours in a year and those that work less than 500 hours in a year. We need their actual hours to put them in the proper group and to determine whether or not they accrue a benefit and/or vesting service.
Why do you want to know if any of our stockholders also own a share of another business?
We must determine if you potentially have a controlled group of companies. IRS Regulations require that all employees of a controlled group must be tested together for discrimination purposes.
