Investment Accounts

Guidant Financial Group, Inc. and your designated outside counsel have discussed with you the requirement of setting up investment/brokerage accounts for each participant of your Corporation’s 401(k) Plan.

Now that you have completed the step of establishing your Corporation and 401(k) Plan checking accounts, we are providing the following information to tell you more about the investment account requirement and to assist you in getting started on this step.

Step 1-Determining Your Responsibilities:

It is important you understand that as Trustee/Custodian of your Corporation’s 401(k) Plan, you, not Guidant Financial Group, Inc., are responsible for all investment decisions made, including, but not limited to determining the appropriateness, potential and quality of the investment strategy you choose. Remember, the 401(k) Plan and IRS rules require the Trustee of a retirement plan to be a prudent investor and invest responsibly.

For general guidelines regarding the establishment of the investment account(s), offering the account(s) to your employees when they become eligible and maintaining the accounts, it is important that you review Section 4.10, 7.2 and 7.3 of the 401(k) Basic Plan Document located on your USB in the 401(k) Plan documents folder. It will also be important to review a copy of the Funding Policy Statement that is also found on your USB in the 401(k) Plan documents folder.

Step 2-Choosing A Brokerage Firm:

Not all brokerage firms will establish the kind of account(s) you need, therefore, it is very important that you inquire with any firm you have interest in, prior to completing any paperwork, to ensure they can sufficiently meet your needs and provide the services for what you are trying to accomplish.

It is important to keep in mind that you are not establishing a retirement plan at your brokerage firm as we have already done that for you. What you are doing is creating investment accounts so that the contributions made by your plan participants can be invested in stocks, bonds, etc. by your plan participants.

As part of the selection process you will want to obtain copies of the account application(s) the firm will require you to complete, along with any other information they can provide regarding the account(s).

Additional information regarding choosing a brokerage firm can be found here.

Step 3-Establishing The Required Accounts:

Upon receipt and completion of the required account application and other supporting documentation as required, you will need to return the completed information directly to the firm. Do not return the information to Guidant. Guidant does not require copies of any of the forms required to set up the investment accounts, although it is important that you keep copies in your files.

Most brokerage firms will require that a Master Account be established for the 401(k) Plan and also separate accounts for each participant of the Plan. All 401(k) contributions by plan participants will go to this Master Account first, if only for a brief time. The Plan Trustee will then direct, via written letter, how much money is to be allocated to each participant account.

As Plan Trustee, you will also want to authorize your plan participants to direct the investment of their own retirement contributions from their account. This is generally accomplished by having each plan participant complete a Participant Application, as provided by the broker you choose. You need only to complete one (1) Master Account Application, but each participant, including yourself, will need to complete a separate Participant Account Application for his or her account in the 401(k) Plan.

Additional information regarding the establishment of the required accounts can be found by clicking here.

Step 4-Sending Funds (Deferral Contributions, Company Match, etc.) To The Investment Account(s):

When it comes time to send retirement contributions to the brokerage firm, generally, the process works as follows:

  • On or around payday you will either send one lump sum check from your Corporation bank account to the master account or direct your payroll provider to send in the contributions to your designated Investment Provider. This check should include all contributions and matching monies for all plan participants during that pay period.
  • You, or your payroll provider, will also send a deposit breakdown form that includes participant’s names and their total contributions with your check. This will be the instruction sheet for your broker to direct the correct amounts to be allocated from the master account to each participant account. It is imperative that you include this deposit breakdown every time you send contributions to the master account, as your brokerage firm has no other way of knowing which plan participant account should get what portion of the total contribution.
  • Your Corporation must keep an accurate accounting of total funds sent in to the Investment provider for each participant account. This information is required by Guidant for your year end compliance testing and reconciliation of participant accounts.
  • The investment/brokerage firm may require additional documentation of you.

We hope that this information is useful in setting up your accounts. If you have any questions regarding this process, please contact Guidant’s Recordkeeping Department at [email protected].

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