As 401(k) plan administrator, it’s your company’s responsibility to provide complete and timely information to your employees. This information includes plan participation details, annual updates, and changes to the 401(k) plan.
Guidant is here to help you make sure you have all the necessary documentation to keep your employees informed. Here’s an overview of the 401(k) plan-related information that employees need to know about.
Note: The number and letter in parentheses refers to the document location in your Guidant zip file.
Informing Employees About the 401(k) Plan
Even if you don’t think your employees will participate in the 401(k) plan, you still have to inform them of it. This IRS requirement is designed to help both you and your employees save for retirement. In fact, the IRS even requires annual plan testing to ensure that the plan is benefiting all employees – that’s testing is one of the services Guidant provides you.
For most businesses, staying in good standing with the IRS is as simple as timely and consistent communication with employees. But, if you’re in a situation where you’re likely to fail testing, Guidant can help you make changes to your plan. Certain elections design your plan to make automatic employer contributions. These contributions help you avoid most plan testing failures and penalties.
401(k) Plan Documents to Share at Time of Hire
When you hire a new employee, you should share information about the 401(k) plan. We recommend including this information as part of your employee onboarding process. Guidant provides all the required documents in your final 401(k) plan zip file. The IRS requires you to provide employees with the following documents at the time of hire.
- Summary Plan Description (3b). A document that explains eligibility and participation information. The information is specific to your company’s 401(k) plan.
- Employee Rollover Opportunity (3d). Provides information about rolling existing retirement funds into the new 401(k) plan.
- Employee Acknowledgement of Receipt of Required Documents (3e). All employees need to sign and return this document.
Documents for Eligible Employees
Employees can take part in the 401(k) plan once they’ve met eligibility requirements. Actual plan participation begins after the 401(k) plan entry date. Before the scheduled plan entry date, employees must receive the following documents:
- Salary Deferral Agreement (4c)
- Designation of Beneficiary (4c)
- Distribution Forms Explanation (4e)
Learn more about plan eligibility with our article on 401(k) Plan Elections and Eligibility.
Employee Documents: Stock Offering
Your Outside Counsel will discuss your business’s initial stock offering period. A stock offering period is required for all ROBS plans. This is because your 401(k) plan purchases stock in the company. If you hire employees during the stock offering period, you must provide them this document:
- Employee’s Right to Buy Employer Stock (6b)
Your employees need to sign and return the first page of this document. You’ll then make a copy for your employee and keep the original in their permanent employee file.
Employee Documents: Safe Harbor Notice
Safe Harbor is a mandatory employer-matching program that helps your plan pass required annual testing. Safe Harbor is an optional plan election. If you have a Safe Harbor plan, you must give an annual Safe Harbor Notice to employees between 30 and 90 days before the end of each plan year. The Safe Harbor notice includes information about:
- The employer matching contribution
- How to make deferrals
- Vesting provisions
We’ll provide you the annual Safe Harbor notice.
Learn more about Safe Harbor elections.
Employee Documents: Plan Restatements
Every six years the IRS requires all 401(k) plans to be restated. Restatements incorporate all federal amendments that have taken place since the previous restatement. Guidant will assist you through the required restatement process. Once the restatement is complete, you’ll need to provide this document to your employees:
- Summary Plan Description (SPD)
Key Takeaways
- Inform all employees about your company’s 401(k) plan. Not offering the 401(k) Plan to all employees can result in the disqualification of your plan – or even IRS penalties.
- Provide employees the required documentation when you hire them. Keep a signed copy of the Employee Acknowledger of Receipt of Required Documents.
- Provide employees the required documentation before they take part in the plan.
- Provide your employees communication related to special plan elections or plan events.