Q. Why do you need to know what my business is worth?
A. The value of the stock is directly related to the value of your corporation. Therefore the value of your corporation allows you to properly report the value of the stock owned by the 401(k) Plan as required on the IRS Form 5500. For more information on business valuations, click HERE.
Q. Do I need to submit supporting documentation for the business value?
A. Yes, this allows us to verify you are using the correct value for reporting purposes. Also it is important information to have in the event of an audit, however unlikely that event may be.
Q. Why do you need to know what family members work for me?
A. The IRS attributes ownership between certain family members (e.g. parent/child, spouse, grandparent/grandchild). Ownership is used to determine the highly compensated and key employees in the annual testing.
Q. Why do you need to know what my business does?
A. The IRS requires a business activity code on the Form 5500. If you tell us your business activity, we can determine which code to use.
Q. Do I need to have a fidelity bond?
A. Yes! A fidelity bond protects your plan from losses due to fraud or dishonesty. Click HERE for more information.
Q. What should the amount of the fidelity bond be for?
A. At least 10% of your total 401(k) plan assets (this includes your QES).
Q. What is a leased employee and how do I know if I have any?
A. According to the Internal Revenue Code, a leased employee is an employee that provides services to a recipient organization pursuant to an agreement, on a substantially full time basis (1,500 hours per year), under the recipient organizations primary direction and control and they are not considered a common law employee. We appreciate this definition is complex and recommend consulting an attorney if you are unsure if you have leased employees.
Q. Do I need to submit my stock ledger if you already have it on file?
A. Maybe not! If you made any changes since last year (e.g. purchased additional stock), then we will need an updated copy. If no changes, answer “No” to question 2 of the Plan Year End Summary and you will not need to resubmit. For more information on your Corporate Stock Ledger, click HERE.
Q. Why do you need to know who the officers of my corporation are?
A. Officer status is one of the factors when determining who the key employees of the corporation are for testing purposes.
Q. Why do you need to know about my ownership in another business?
A. We need to determine if a controlled group exists between your Guidant C-Corporation and any other business you have ownership in.
Q. How does being part of a controlled group (CG) affect my 401(k) Plan?
A. If one business in a CG has a retirement plan, that plan must cover the employees of the other business(es) as well.
Q. Why does it matter when the deposits of deferrals or loan payments were made?
A. The Department of Labor (DOL) considers deposits made later than the 7th business day following the date of the withholding to be late deposits. If you have made late deposits, you may need to contribute lost earnings to the plan and pay an excise tax. Please make sure to transmit deferrals & payments as soon as administratively feasible. We will assist you in the correction of any late deposits.
Q. Why do you need to know if money left the plan?
A. Any time qualified funds leave the plan it is considered a distribution. If the distribution is greater than $10, a Form 1099-R is required. Even if the money was rolled directly to another plan, a 1099-R is still required. Guidant can prepare this form at your request.
Q. Am I required to provide matching or profit sharing contributions?
A. Not necessarily! Unless your Plan is designed as a safe harbor plan; which would require mandatory matching or non-elective contributions; these contributions are discretionary.
Q. What are 401(k) Plan Statements?
A. For information on 401(k) Plan Statements, click HERE.
Q. What are Investment Management Statements?
A. For information on Investment Managements Statements, click HERE.
Q. Who should be listed on my census?
A. The census needs to list ALL employees of the corporation during the plan year, regardless of whether or not they have met the eligibility requirements for the plan.
*Please note that Independent Contractors paid via a Form 1099 are notemployees and therefore need not be included on the census.
Q. Should I include employees that left my organization?
A. If a participant terminated employment, was rehired, took a leave of absence, retired, or passed away during the plan year, this must be notated in the Type of Status Change field. You would then need to input the date of the status change as well.
Q. What information should be included for each employee?
A. The following information needs to be completed for ALL employees: Name, Social Security Number, Date of Birth, Date of Hire, Compensation, and Hours Worked.
Q. What if an owner did not take compensation?
A. If an owner of the corporation worked, but did not receive compensation, the hours that they worked would be considered “sweat equity” and should be included on the census. These hours count towards eligibility in the plan.
Q. Where can I find gross compensation for an employee?
A. The gross compensation can be found in box 1 of the W-2.
Q. Should I include employees from other businesses that I own?
A. If a controlled group exists between your Guidant C-Corporation and any other entity, you must include all employees of the other business(es) on the census as well.
Q. My plan year ends in a month other than December, should I provide information for the calendar year?
A. If you do not have a calendar year plan (plan year ending December 31), please ensure you answer all questions for the plan year, not the calendar year. For your reference, your plan year is election #7 on the Adoption Agreement.
Q. What is a Participant Deferral?
A. A Participant Deferral is the amount the employee had withheld from their paycheck (pre-tax), to be
contributed to the 401(k) Plan.
Q. What is Participant Roth?
A. Participant Roth is the amount that the employee had withheld from their paycheck (after-tax), to be
contributed to the 401(k) Plan, as allowed by the Adoption Agreement.
Q. What is Company Match?
A. Company Match is the amount that the corporation matched on the employee’s deferrals. If you
would like Guidant to calculate the match, please provide the matching formula you would like to use
on the Plan Year End Summary (question 17).
*Please note that the matching contribution needs to be deposited into the plan no later than the last day of the following plan year (i.e. 12/31/12 for a 12/31/11 plan year end).
Q. What is Company Profit Sharing?
A. Company Profit Sharing is the amount that was allocated to the participant as a non-elective
contribution by the employer. All eligible employees are eligible for the profit sharing contribution,
regardless of whether or not they deferred into the plan. If you would like Guidant to perform the
allocation, please provide the total amount of the Profit Sharing contribution.
Q. What is a Qualified Rollover?
A. Qualified Rollover is the amount that an employee has rolled over from another qualified retirement
plan. This does not need to include the initial rollover used to purchase the employer stock.