FREQUENTLY ASKED QUESTIONS ABOUT 401(k)’S, TPA SERVICES, AND RETIREMENT PLAN RELATED TOPICS

Last Updated: December 1, 2023

WHAT IS A TPA?

A TPA (Third Party Administrator) works with employers on their retirement plan objectives, such as establishing a 401(k). A 401(k) TPA is retained by the Plan Sponsor to perform critical tasks required to maintain plan compliance.

WHY SHOULD I CONSIDER USING A TPA?

A qualified retirement plan, in additional to being for the benefit of the plan participants and their beneficiaries, must perform certain testing, reporting, and disclosure functions to be qualified. A TPA will work with Plan Sponsors (employers, HR managers, for example) to assist them in performing their duties to the plan. The services that a TPA generally will perform are:

Plan Design and Document Services: Consultation, Plan Document Creation, Plan Participant Notices
Non-discrimination Testing
Employer Allocation Preparation
Account Reconciliation Services
Valuation Reporting
Government Filing Services
Dedicated Consultants and One-on-One Support

While not all Plan Sponsors select a TPA, the benefits of using one may help the Plan Sponsor avoid costly mistakes.

HOW DO I SELECT THE RIGHT 401(k) TPA?

TPA services can vary, widely. Selecting the right one for your retirement plan comes down to asking questions, a lot of questions:

Does the TPA offer financial advice (aka are a “producing” TPA)?
Does the TPA hold the assets of the plan (as a record-keeper with daily valuation services)?
Will the TPA provide support in designing the right plan for your company?
What qualifications do the administrators hold?
How long has the TPA been in business?
Are there any conflicts of interest? Do they prepare the 5500 and audit it as well?
Does the party introducing you to the TPA have any concerns?
Does the TPA have clients that are in a similar line of business as you?
Is the data collected by the TPA secured?
What are the expenses?

While cost is an important factor, you should review all expenses and their respective services. Ask yourself: Are we receiving value for the cost?

HOW CAN I START A RETIREMENT PLAN FOR MY COMPANY?

It’s easier than you might think! Most new 401(k) plans can be set up and ready for funding within weeks. Call 888-679-4015, click, or email Sales to explore options about plan design and capabilities. Our team can offer insights that will better prepare you to sponsor a plan.

CAN UNIGLOBAL WORK WITH A START-UP COMPANY?

Yes! Our services are for all employers; we believe everyone should have the ability to save for retirement, no matter what.

I AM A ONE-PERSON COMPANY, CAN I HAVE A RETIREMENT PLAN?

The short answer is yes, but you will want to make certain that it is properly designed in the event you hire on a second employee. Your Solo-K may not always only cover you. We can help you craft the perfect plan.

DOES UNIGLOBAL PROVIDE FINANCIAL ADVICE?

Uniglobal does not provide investment related advice. We work with leadership to help maintain IRS and DOL compliance for your company retirement plan.

WITH UNIGLOBAL AS OUR 401(K) TPA, WHAT ASSET PROVIDERS ARE AVAILABLE FOR OUR COMPANY’S RETIREMENT PLAN?

Uniglobal primarily partners with record-keepers that align with our core values and beliefs. These partnerships are in place for all of the best in class Asset Providers. An integrated, unified, experience is what we seek for our clients; a few that meet our standards are:

WHAT IS A 401(K) PLAN?

A 401(k) is a component of a qualified profit-sharing plan; it allows employees to contribute a portion of their wages into an individual account. The benefit is that an employee, by contributing “elective salary deferrals,” not only saves for retirement but those deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals).

WHAT IS A MATCH?

Employers sponsoring a qualified retirement plan may contribute to employees’ accounts by offering an Employer Match. Only participants that elect to defer into the plan share in the Employer Match, unlike an Employer Profit Sharing (or non-elective) Contribution.

WHAT IS PROFIT SHARING?

Employer’s may offer a Profit Sharing contribution as part of their retirement program. This contribution is generally allocated to all plan participants, regardless of them electing to defer into the plan of their own wages.

WHAT ARE THE CONTRIBUTION LIMITS FOR 2024?

The Salary Deferral amount has increased to $23,000 for 2024. For those turning 50 or are over the age of 50, the Catch-Up Contribution affords you an additional $7,500 you may defer, an increase of $1,000 over the prior 2023 limit amount.

The IRS has also increased additional Defined Contribution Plan Limits for 2024:

“The limitation for defined contribution plans under Section 415(c)(1)(A) is increased from $66,000 to $69,000.”
“The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $330,000 to $345,000.”
"The Social Security Taxable Wage Base has increased from $160,200 to $168,600 for 2024."

Lear more on these and other Plan Limits on our Contribution Limits page.

WHAT IS A SAFE HARBOR 401(k) PLAN?

A Safe Harbor 401(k) plan is a type of employer-sponsored qualified retirement plan that generally satisfies the nondiscrimination testing provided the employer meet certain criteria with respect to contributions, vesting, and employee notification. The Safe Harbor 401(k) Plan is an attractive offer for employers. The Safe Harbor provision can be structured in more than one way to meet objectives.

WHEN CAN I START A SAFE HARBOR PLAN?

Depending upon the plan year, a Safe Harbor plan must be established and in place for at least 3 months to be effective in that same calendar year. Existing plans that want to amend to adopt a Safe Harbor provision should do so well before the end of their current plan year to be effective for the next plan year.

WHAT IS AN HCE?

HCE is an acronym for “Highly Compensated Employee.” An HCE is defined as any employee of a company who satisfies at least one of the following:

Owned a more than 5% interest in the business, regardless of compensation paid, at any time during the current or preceding year, or
Had stock attribution from the person in the first point, or,
Received compensation from the business in 2023 (the "lookback year") of more than $155,000, and, if the employer so chooses, was in the top 20% of employees when ranked by compensation. The compensation limit is an amount that may fluctuate annually; see our limits page for future, current, and prior HCE compensation limits.

WHAT IS A KEY EMPLOYEE?

A Key Employee is any employee meeting at least one of the following criteria at any time during the Plan Year:

Owns more than 5% of the interest in the company at any time during the year or the prior year, or
Any spouse, child, parent, or grandparent of such more than 5% owner employed by the company, or
Owns more than 1% of the interest in the company AND received compensation in excess of $215,000 (2023), or
An officer receiving compensation in excess of $215,000 in 2023.

WHAT ARE NON-ELECTIVE CONTRIBUTIONS?

Employer Non-Elective contributions are contributions to a retirement plan that do not require an election by the participant to receive the contribution. In other words, it’s money allocated to participants without those participants having to defer from compensation into the plan.

In a 401(k), generally, this type of contribution is synonymous with Profit Sharing. Unlike an Employer Match, where participants must defer from compensation to share in the Employer Match, the Employer Non-Elective Contribution is allocated to all eligible participants regardless of them contributing to the plan from their own compensation.

WHAT ARE HARDSHIP DISTRIBUTIONS?

If the plan allows, a participant may take a distribution while still employed on account of financial hardship. These hardship distributions from elective deferrals are taxed when distributed and are not repaid to their account in the plan (as would be the case with a loan, for example).

A hardship distribution is limited to the amount needed to satisfy the heavy and financial need. If a participant requests a hardship on account of medical bills totaling $400 they may not take more than $400, the amount needed to satisfy the hardship.

Frequently Asked Questions