Frequently Asked Questions

about 401(k) Easy Online run-it-yourself 401k plan

What are the three main advantages 401k Easy Online has over other 401k plans?

What are the two main differences between 401k Easy Online and other 401k plans?

What is a "401k prototype plan"? What does it mean that 401k Easy Online includes one?

We already have a 401k plan, but it's a headache, and costs a fortune. Can we switch to 401k Easy Online?

Can we hire you to set up and run our 401k? What's the cost?

We've never sponsored a 401k plan before. Will someone help us with deciding the particulars?

What if we start with a self-service plan, then later decide we want an outside-serviced plan?

Can 401k Easy Online handle 401k matching contributions? How about profit-sharing contributions? Are either mandatory? Do we have control over rates and vesting schedules?

Does 401k Easy Online let us exclude part-time workers from receiving 401k matching contributions?

Can 401k Easy Online handle 401k loans? Are they mandatory? Do 401k loans increase the price of 401k Easy Online?

Can 401k Easy Online handle 401k hardship withdrawals? Are they mandatory?

What kind of investments are available with 401k Easy Online? Can we offer 401k self-directed brokerage accounts?

Why do we have to get a new copy of the 401k Easy Online software each year?

Why do we pay for "eligible employees," not just those who participate in our 401k plan?

How does 401k Easy Online help keep our 401k in sync with IRS regulations?

Does 401k Easy Online help with 401k compliance testing?

Does 401k Easy Online help with 401k year-end tax reporting?

How else does 401k Easy Online simplify 401k plan administration?

[topic 1]

What are the three main advantages 401k Easy Online has over other 401k plans?

1. It's Easy to Use

With 401k Easy Online, most small businesses can run their 401k plans in less than 20 minutes a month. You simply feed some basic payroll information -- the same data most off-site, third-party vendors would make you collect anyway -- and click "Process." In seconds you're ready to print account statements for plan participants, run compliance tests on your plan (in seconds), or prepare any of a myriad of useful reports for your records.

2. It Keeps Your 401k Assets Secure

With 401k Easy Online you have direct, constant control and oversight over your employees' 401k contributions -- from the time the money is separated from their taxable payroll until it's safely and securely deposited with their 401k investment accounts. The press has reported on the diversion of plan assets by unscrupulous employers and unscrupulous third-party administrators. 401k Easy Online helps protect employees' assets because all transactions occur between the employer and the investment company housing the  plan's assets.  

As an additional 401k Easy Online safety measure, each plan participant can process and print a personal account statement at will -- as well as other reports that document every transaction. These handy easy-to-read reports make it virtually impossible for malfeasance to go undetected — particularly when the statements are viewed in conjunction with employee pay stub deductions. The 401k Easy Online statements summarize the participant's overall 401k activity during the month (deposits, withdrawals, transfers in and out) and show where the money went and what it's current value is.

3. It's Extremely Affordable

401k Easy Online saves clients, on average, 60% to 90% a year off traditional 401k expenses.

-- With pricing that starts at just $1195 a year for plans serving two to four employees and that increases ONLY with plan size (all options, investments, tech support and more included), 401k Easy Online pricing is hard to beat.

-- Visit our Pricing and Price Comparisons pages to see how affordable a 401k Easy Online plan can be for your company — and don't forget to try out the online 401k demo. You'll be surprised at how easy it can be to save all that money!

1. Cost is the primary difference -- It could well be the mitigating factor in whether or not your company can sponsor a 401k.

-- No reasonably comparable 401k plan is priced as economically as 401k Easy Online.

2. Investment choice is another major source of variation:

-- 401k Easy Online lets your 401k plan offer any of an immense array of no-load mutual fund families and/or self-directed brokerage accounts.

-- Self-directed brokerage accounts mean each plan participant has access to his or her choice of investments. Stocks, options, foreign securities, mutual funds, bonds, corporate, municipal and zero coupons, certificates of deposit, government obligations, and UIT's are all available.

-- Most other plans offer far less selection; some limit you to no choice -- they preselect the investments, usually their own, and often charge significant fees for additional, nonproprietary investments.

[topic 3]

What is a "401k prototype plan"? What does it mean that 401k Easy Online includes one?

The prototype plan is the master document describing and defining every aspect of a 401k prototype. The IRS analyzes this master and deems it "approved" or "disapproved." Once approved, the master can be used to create any number of 401k plans that fall within the approved specifications.

-- Included in the prototype plan can be a certain amount of plan flexibility, such as a variety of possible participation eligibility requirement.

-- With 401k Easy Online, you have IRS-approved flexibility with your plan's participation eligibility parameters, with whether or not to offer employer contributions and if so what type (matching, profit-sharing, and/or qualified nonelective) and at what rate, with whether you want to offer 401k loans, and more. See our Plan Customization Options page or our 401k Order Form for a complete list of options currently available to 401k Easy Online clients.

-- Ongoing plan qualification depends on, among other things, that your plan pass its annual IRS compliance tests (unless you've chosen to run your plan via the IRS-approved safe harbor method of plan administration).

-- 401k Easy Online includes both point-and-click compliance testing with results in seconds (so you can run the tests after you finish each month's processing to see long before the official year-end tests if any undesirable trends are surfacing) and safe harbor software automation functions.

[topic 4]

We already have a 401k plan, but it's a headache and costs a fortune. Can we switch?

Yes. Our streamlined straightforward plan conversion process makes plan takeovers both easy and efficient -- and with NO lengthy black-out period! Our five-point plan conversion procedure is:

-- First we get your new customized 401(k) plan up and running smoothly.

-- Employees enroll in the company's new 401k Easy Online and make new investment designations.

-- We guide the process of liquidating former 401(k) assets and transferring the proceeds directly into the new plan..

-- 401k Easy Online automatically allocates the inbound transferred assets into each participant's personal investment designations.

-- This entire plan conversion process is transparent and can be monitored by employer and employees alike.

[topic 5]

Can we hire you to set up and run our 401k? What is the cost?

Pension Systems Corporation does not offer full service 401k plans, but we can recommend an affordable, reliable provider once we know your 401k needs. Please contact us if you're looking for a full-service, reliable, small business plan provider.

[topic 6]

We've never sponsored a 401k plan before. Will someone help us with the particulars?

In establishing your 401k Easy Online 401k plan, we'll explain the 401k basics to you as well as the plan customization options we offer and how each typically affects the operation and popularity of a plan of your size.

Once you choose the features you want for your company plan, we'll "hardwire" your decisions into your 401k Easy Online. The software then "knows" your plan and handles most of your self-service plan administration for you.

-- Your 401(k) Easy Management Guide offers two levels of help: The Quick Guide tells you the short and simple of what to do to get your plan up and running and continued running; the complimentary 401(k) Easy Management Guide on CD-ROM gives background details on 401k plan operation and less frequent transactions.

-- There's free technical support, too, should you ever need it.

Our technical support staff fields inquiries on technical, software-related questions as well as general 401k and related questions. We are not, however, pension law attorneys, accountants, actuaries or tax preparers, who are the only qualified people to answer certain questions.  It is always advisable to consult with your tax and/or legal advisors in matters that concern your company's 401k plan.

[topic 7]

What if we start with a self-service plan, then later decide we want an outside-serviced plan?

If, for any reason, you decide you no longer want to run your own 401k plan, we can quickly convert your 401k Easy Online into a 401k serviced by an outside company -- we can even recommend a quality provider who specializes in 401k plans of your size.

So if your company grows by leaps and bounds and you decide you would rather pay someone else to do the work, we can help. Just let us know!

[topic 8]

Can 401k Easy Online handle 401k matching contributions? How about profit-sharing contributions? Are either mandatory? Do we have control over rates and vesting schedules?

401k Easy Online allows for the most popular 401k options permitted under current law, but does not mandate inclusion of any. Employer matching contributions, profit-sharing contributions as well as qualified nonelective contributions are included in these options.

-- With 401k Easy Online you decide whether to offer (or exclude) employer contributions.

-- If you decide to include employer contributions, you choose the type(s) (matching, profit-sharing and/or qualified nonelective) and define the rate(s). Most any rate allowed by 401k regulations is permissible with 401k Easy Online.

-- If you decide to include employer contributions, you define the vesting schedule, too. You can choose a different schedule for any matching and profit-sharing contributions. Qualified nonelective contributions are, by law, always 100% immediately vested when made.

[topic 9]

Does 401k Easy Online let us exclude part-time workers from receiving 401k employer contributions?

To exclude part-timers from receiving employer contributions, simply exclude them from participation in the plan by setting appropriate length of service and other participation requirements for your plan.

-- If you want part-timers to be able to participate in your 401k plan but not receive employer contributions, you're better off not offering employer contributions but instead offering some type of bonus to the groups of employees you seek to reward. 401k contributions are a percentage of pay, including bonuses, so paying bonuses will allow employees to contribute more to their 401k accounts themselves (in lieu of your making contributions for them). Please contact us or consult your tax advisor for details and further options.

[topic 10]

Can 401k Easy Online handle 401k loans? Are they mandatory? Do 401k loans increase the price of 401k Easy Online?

401k Easy Online allows for all the most popular 401k options permitted under current law, but does not mandate inclusion of any. 401k loans are one of these options. Your company sets the policy for its plan within the IRS guidelines.

There is no extra charge for including 401k loan capabilities in your 401k Easy Online system.

-- Your company can charge plan participants a "reasonable" (in the IRS' eyes) fee for processing 401k loans; $25 to $50 is most common.

-- The easy "point-and-click" administrative tools to handle 401k loans are contained within your plan-specific 401k Easy Online system.

-- 401k Easy Online does not charge your company or its plan participants anything for 401k loans.

NOTE: In 2002 the availability of 401k loans to certain business owners and officers was liberalized within what are known as the EGTRA Amendments. You can view a summary of the amendments within this website's ERISA 404c Compliance section. If you're a business owner and intend on taking out a 401k loan, we suggest you talk with a qualified tax advisor first to make sure you're clear on the new, more liberal regulations.

[topic 11]

Can 401k Easy Online handle 401k hardship withdrawals? Are they mandatory?

The Internal Revenue Code says hardship withdrawals MUST be available to qualifying participants of every 401k plan. 

-- Your company can charge its plan participants a "reasonable" (in the IRS' eyes) fee for processing hardship withdrawals; $25 to $50 is most common.

-- The easy "point-and-click" administrative tools to handle hardship withdrawals are contained within your plan-specific 401k Easy Online system.

-- 401k Easy Online does not charge your company or its plan participants anything for hardship withdrawals.

[topic 12]

What kind of investments are available with 401k Easy Online? Can we offer 401k self-directed brokerage accounts?

401k Easy Online clients can choose to offer mutual fund families and/or self-directed brokerage accounts within their 401k plan.

from among hundreds of SEC-regulated mutual fund families for their company 401k plan. Investment types include:

-- The mutual fund families are all SEC-regulated and all offer a diversity of risk-return scenarios.

-- We often recommend choosing no more than three different families of mutual fund investments for your self-service 401k plan. Each family is designed to encompass the full spectrum of investing needs.

-- Self-directed brokerage accounts (through Schwab, Ameritrade, Fidelity or others) provide a greater number of investments and investment types, if that's what you're looking for. There's a tremendous selection of no-transaction-fee mutual funds as well as stocks (major exchanges and OTC markets), options (covered calls), foreign securities (both listed and OTC), bonds (corporate, municipal, and zero coupon), and certificates of deposit, government obligations, and UIT's.

-- Offer a mutual fund family or self-directed brokerage accounts — or both; whatever best suits your 401k needs.

-- Visit our Investments section for specific listings of potential 401k investment options.

[topic 13]

Why do we re-subscribe to 401k Easy Online each year?

The 401k Easy Online software is, like tax return software, specific to the year for which it was written. It's automated functions take into account numerous regulatory parameters that have been written into the program so you never have to worry about them.

-- Your 401k Easy Online processes information pertaining only to the tax year for which it was written.

-- The fee you pay for your revised, customized 401k Easy Online self-service 401k each year is, on average, 60% to 90% less than what you'd pay anyone to run your 401k plan for you.

-- You pay the $995 401k plan and system customization fee ONLY at your plan's initial setup, not each year thereafter when you receive your upgraded system.

[topic 14]

Why do we pay for "eligible employees," not just those who participate in our 401k plan?

Plan testing requirements set by lawmakers are written in terms of eligible employees, not participating employees; your 401k Easy Online program, therefore, is customized to account for all eligible (not just participating) employees.

The government's goal in creating the 401k plan is to encourage people to save money for their retirement. Lawmakers want all types of employees to make use of the 401k -- especially those categories of wage earners who historically rely heavily on Social Security for their retirement income. Employers are permitted to restrict eligibility to participate in company 401ks somewhat, but government rules have been written to encourage participation among lower-paid and mid-level employees; those who historically rely  more heavily on Social Security and other government assistance during retirement.

There are numerous ways to encourage widespread participation in your company 401k plan. The 401(k) Easy Management Guide contains many suggestions, or you can contact us for ideas before you even have us create your plan.

[topic 15]

How does 401k Easy Online help us keep our 401k in sync with IRS regulations?

We've built several safeguards into the 401k Easy Online self-service 401k system to help you keep your 401k in line with ever-changing IRS regulations:

-- We program relevant IRS regulations about contribution limits and compliance testing, among other things, into your 401k Easy Online. For instance, the online service won't let you enter a contribution for a participant that will push the participant's year-to-date contribution total over the allowable maximum (and it tells you how much, if anything, the participant CAN contribute without exceeding the maximum).

-- 401k Easy Online runs the all-important ADP (average deferral percentage), ACP (actual contribution percentage), and top-heavy compliance tests that every 401k plan must pass at year's end. Although your plan only has to pass these tests at the end of the plan year, 401k Easy Online can run year-to-date tests as often as you like (we recommend monthly) so you can spot noncompliance trends -- long before mandatory year-end testing is done -- and running those tests is as easy as a mouse click! Consider 401k Easy Online as your in-house 401k Compliance Early Warning Radar!

-- 401k Easy Online allows you to run your 401k plan using the safe harbor method of plan administration instead of using 401k compliance testing, if you prefer.

-- 401k Easy Online will only accept data that pertains to the appropriate calendar year, so you'll never process data under the wrong year's regulations.

[topic 16]

Does 401k Easy Online help with IRS 401k compliance testing?

Yes -- with just a click of the mouse you can run year-to-date tests as often as you want to identify any trends toward noncompliance, so you can fix the problem before the final year-end tests.

-- 401k Easy Online runs the all-important ADP (average deferral percentage), CAP (actual contribution percentage), and top-heavy compliance tests that every 401k plan must pass at year's end. Although your plan only has to pass these tests at the end of every plan year, 401k Easy Online can run year-to-date tests as often as you like (we recommend monthly) so you can spot noncompliance trends -- long before mandatory year-end testing is done.  Running practice compliance tests is as easy as a mouse click!  Consider 401k Easy Online as your in-house 401k Compliance Early Warning Radar!

[topic 17]

Does 401k Easy Online help with 401k year-end tax reporting?

Included with your 401k Easy Online system is free access to our 401k FedForms website.

-- The 401k FedForms website contains annotated versions of relevant 401k-related federal reporting forms (Summary Annual Report, 5500 series, 1099-Rs, and more). The annotations tell you where within 401k Easy Online to find needed information.

-- The website also tells you what forms are relevant to your particular plan, and when each form is due to the IRS.

-- The 401k Easy Online software pulls many of the numbers together for you in a brief series of easy to read reports to further expedite your federal reporting processes.

[topic 18]

How else does 401k Easy Online simplify 401k plan administration?

Because we're long-experienced in all aspects of 401k administration for plans of all sizes, we know plan administrators' needs and have created a series of brief, easy to read reports that enable plan administrators to find the information they need -- quickly -- so they can do their jobs -- quickly.

-- Whether it's reports summarizing investment accounts that accompany the month's contributions, or year-to-date account statements for plan participants, or information on outstanding 401k loans, the information is available at a mouse click.

-- The 401(k) Easy Management Guide contains an index summarizing the content of each report and typical uses for the information; it's easy to determine which report will best suit your needs.

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