Q1. What are the 401(k) contribution limits for 2019?

For 2019, the IRS limits 401(k) contributions to an $19,000 annual maximum. If you're 50 years of age or older, you can also make catch up contributions, up to an additional $6,000 annually. For more information on 401(k) contribution limits visit this reference guide.

Q2. What is a 401(k)?

A 401(k) is an employer-sponsored retirement plan (also referred to as a defined contribution plan) that allows an employer and employee to contribute to an investment account for the employee's benefit all tax-deferred.

Employers aren't required to offer a 401(k), but many often include it as part of a competitive compensation package, along with standard benefits like healthcare and paid time off, to attract and retain talent.

Contributing to a 401(k) is one of the best ways to save for retirement because you can take advantage of benefits such as:

• Reducing your income taxes for the year in which contributions are made
• Tax free growth of your investment account
• Ability to transfer funds between employers if you change jobs
• Automatic deductions from your paycheck

Q3. What types of retirement plans is Inde able service?

Inde can service a variety of plan types including Traditional (i.e., Proft Sharing Only), Solo(k), 401(k), 401(k) Safe Harbor, 401(k) Audited, Cash Balance, Defined Benefit, and non-leveraged ESOP Plans.

Q4. What is a "fidelity bond" and what do I need it for?

Fidelity bonds are designed to act as insurance and protect 401(k) plans from loss that could be due to fraud by plan fiduciaries. A fidelity bond is required for every plan, and must be put in place to cover any person who is responsible for the plan or handles plan funds. Generally, the coverage must be at least 10% of the amount of assets in the plan.

Q5. What do I have to notify my employees about?

Employers that provide a retirement plan benefit to their employees have to provide certain notices and disclosures to their employees on an annual basis. Inde provides employers assistance in meeting this responsibility.

Here's a summary of the most common notices and disclosures that may be applicable to you:

• Safe Harbor Notice - Provides advance notice about Safe Harbor features and rules that apply to your plan
• QDIA Notice - Explains default investment selections that apply when newly eligible participants don't select their investments
• Fee Disclosures - Explain costs associated with your retirement plan
• Blackout Notice - Informs participants when there is a "blackout period," which is defined as a period of more than three business days during which a participant is temporarily restricted from making investment changes or withdrawals from their account
• Summary Annual Report - Summarizes account activity and benefits accrued during the year
• Summary Plan Description - Explains how the plan operates
• Summary of Material Modifications - Explains any significant changes that are made to your plan. As you might guess, it is only required if changes are made

Q6. Who is eligible to join the 401(k) plan?

Generally, all employees can become eligible to join your 401(k) plan, including part-time and seasonal employees once they meet your specific eligibility requirements.

Inde works with small businesses to design custom retirement plans that define eligibility requirements that are right for your company. With our help, you can customize requirements such as minimum age (up to 21 years old), minimum service (up to 1 year), entry dates and frequency.

Example

Consider an employer that elects to have employees gain eligibility after 3 months of service with monthly entry dates on the first of each month. An employee that starts on January 15th would meet the minimum service requirements on April 15th, and have an entry date of May 1st.

Monthly entry dates allow for employers to limit their administrative burden in that they only have to consider eligibility once per month instead of on an ongoing basis. Depending on the service requirements, entry dates can occur as infrequently as once or twice per year.

Q7. My adviser said I should hire a Third Party Administrator (TPA). What do they do?

A Third Party Administrator (TPA) is an outside company hired to run many day-to-day aspects of your retirement plan, perform annual compliance testing, prepare tax forms, and help participants.

Q8. What does it mean to be a Key Employee or a Highly Compensated Employee (HCE)?

Key Employees (Keys) and Highly Compensated Employees (HCEs) are terms used to describe certain groups of employees for compliance purposes.

Key Employees

A Key Employee is an employee that at any time during the year meets one of the following criteria:

• An officer of your company with annual compensation above $165,000;
• A more than 5% owner;
• A more than 1% owner with annual compensation above $150,000;
• A family member of a more than 1% owner

Highly Compensated Employee

A Highly Compensated Employee is an employee that meets one of the following criteria:

• An employee who owns more than 5% of the company in the current or preceding year;
• An employee who received over $120,000 in compensation in the preceding year;
• A family member of a more than 5% owner, such as a spouse, parent, grandparent, child or grandchild.

Why it's important to know

Each year, we perform tests on your plan to show the IRS and Department of Labor that your plan does not favor Key Employees or Highly Compensated Employees over non-Key Employees or non-Highly Compensated Employees (NHCEs).

Being able to distinguish whether or not an employee is considered a Key Employee or a Highly Compensated Employee is critical for performing an accurate test.

Q9. What is employee census data? Why is it so important?

Employee census data is data that is used for year-end compliance testing, confirm employee eligibility, track vesting, queue required minimum distributions, and monitor contribution limits.

Each year we provide you with our current record of your employee census and request that you update it with changes reflecting activity that happened throughout the year.

The accuracy of this information is critical to ensure that our services are completed timely and accurately. Your census may include the following information:

• Employee name
• Employee date of birth
• Employee social security number
• Employee date of hire
• Employee date of termination, if applicable
• Employee compensation
• Employee’s hours of service during the year
• Employee deferrals year-to-date
• Employer match contributions year-to-date
• Employee ownership of the company
• Employee officer status

Q10. I just ran payroll. When do I submit contributions to the investment company?

Generally within 7 business days, or as soon as administratively possible.

One of the most common compliance issues we see is employers not remitting 401(k) contributions to their investment custodian within 7 days of withholding that money from payroll.