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Small business owners & plan sponsors

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.


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.


Employees & participants

Q1. What does it mean when my employer says they will "match"?

Matching means, basically, free money. Your employer, in order to encourage you to save your money, will put money into your account.


If you put in $1,000, they may match that amount and put in $1,000. Employer match may be subject to vesting which means your time as an employee with the company determines the portion you can keep. Your contributions deducted through your paycheck are not subject to vesting and are always yours to keep.

Q2. Can I put my whole paycheck into the 401(k) plan?

Almost. As long as your plan allows, you may defer your entire paycheck less the amount that needs to be withheld for Social Security and Medicare taxes.

Q3. Can I borrow from my 401(k) plan?

Yes, this is called a loan and it is a common feature of 401(k)s that many other types of accounts don't allow (like IRAs). As long as your plan allows, you can generally borrow half of your vested account balance up to $50,000. Loan repayments include amounts for both principal and interest that you pay back into your own account via a separate payroll deduction from any contributions you are making.

Q4. Can I withdrawal money from my 401(k) plan?

Distribution is the word the IRS and financial industry use to talk about withdrawing money from a 401(k) plan. Generally, you are eligible to take penalty-free distributions at age 59 1/2, but the IRS does not require that employees take distributions until the calendar year that you turn 70 1/2.

If you take a distribution before turning 59 1/2, the IRS may assess a 10% penalty in addition to the income taxes due.

Q5. What's the best way to find the status of my distribution?

To find out the current status of your distribution, you can give our customer care team a call, send them an email or chat with them online.

Trusted advisers and partners

Q1. Which investment platforms do you work with?

The Independent of Independent Retirement is a nod to the fact that we work with all types of recordkeepers and investment platforms. Over the last 10 years we've developed a deep knowledge base of these vendors -- knowledge that we'd be happy to extend to you.

Q2. Some Third-party Administrators manage money. Do you?

We want to partner, not compete for business. We do not provide investment advisory services, nor do we want to. We're happy managing the technical aspects of compliance and administration.

Q3. How can I get a proposal started?

We have a business development team dedicated to your success. You can reach out to Eric Burnside, fillout an RFP or contact our care team.

Q4. I have a plan being audited. Can you help?

We serve hundreds of local businesses, and partner with many financial advisors, CPAs and attorneys. After 10 years of compounding knowledge, we're confident we can handle the most complex of technical issues.

Our staff includes IRS Enrolled Retirement Plan Agents, Certified Pension Consultants and Qualified Pension Administrators.

Q5. I'd like to grow my 401(k) business. Who do I reach out to?

We love working with trusted advisers to help them grow their 401(k) business. Please reach out to Eric Burnside on our business development team for more information