TESTIMONIALS and FAQs
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How do I Use the Online Testing Program?
Simply upload your employee data,
run the test, and print the results.
You could enter a couple eligibility requirements before running your first test; or just use the
'drag-and-drop' feature to categorize employees as eligible, ineligible, HCE, etc..
This service is very valuable, especially when officers are deciding how much of their
year end bonus to put in the 401k.
| We suggest you have a professional TPA review your first test. This will give you the confidence to run test
after test any time you want throughout the year!
Click here for other FAQs
Testimonials
Our site went active in 2008 after more than 6 months of beta testing.
Here are comments & endorsements from associates & clients:
"You have a great product!"
Beth Harvieux, FPC
Payroll Administrator, Wealth Enhancement Group
"401ktest.com gives us the ability to quickly and efficiently provide our clientele with a valuable web based service.
The site is priced well, easy to use, and helps us to better fulfill the needs of our customers."
John Magaletti
President, SwiftChecks Payroll Services
"401ktest is a fabulous tool for plan sponsors. Its online capabilities are friendly and efficient."
Rob Martin, Qualified Pension Administrator
President, Martin Consultants, LLC
"Worry no more about 401k compliance headaches. 401ktest will leave you feeling completely confident about your 401k plan’s compliance with
anti-discrimination rules at a fraction of the cost of competitors".
Tom Schaller
President / Founder, Window and Door Screen Pro.
Owner & Instructor, House of the Rock Martial Arts: Westerville Branch
This web site was reviewed and enthusiastically endorsed by a national government agency. The revenue agent who tested the site would not allow me to
quote him or list his employer by name, so I'll leave his identity to your imagination.
Anthony C. Gruber, CPA
President, Projected Financial Statments.com
“We failed our Discrimination test 3 years in a row, even though our Payroll and our 401k administration are with
fortune 500 companies.
We have a great deal of bonus activity in the 4th quarter, so 401k compliance is challenging for us. But with
401ktest, we can run a test each time we do payroll to make sure we are still in compliance. We do the test before
payroll is finalized: That way we can revise our Officers’ withholdings if we have to”.
The name of the Company, the Administration firm, and the Payroll firm have been withheld for obvious reasons.
This is an embarrassing antecdote, but it happens all too often.
FAQs
Clients who provide comments and questions are kept anonymous to protect the client: Benefit Administration is a very private
matter, so we will not refer to a client's identity without their permission.
Index:
Click one of the hyperlinks below to see the Question/Comment in detail.
How do I set up a file that can uploaded to 401ktest.com?
Your Payroll Company may have the ability to create this
file for you. Otherwise follow these simple instructions:
The file must be in tab-delimited format and must have the following columns. The file can easily be prepared in Excel, then
saved as a .txt file rather than .xls:
1. Employee Number (optional - may be a blank column)
2. First Name
3. Middle Initial
4. Last Name
5. Birth Date (M/D/YYYY)
6. Hire Date (M/D/YYYY)
7. Hours Worked This Year (Stored as a whole number. IE: 2080.75 becomes 2080)
8. Gross Pay
9. 401k Withheld
10. Company 401k Contribution
Make sure your numbers & names don't include comma's, colins or parentheses. The upload process doesn't recognize these symbols.
Click here to see a sample text file with fictitious payroll data.
Save it to your computer then upload it to Excel, then you can see the .txt document in columns, which will help
you see how the live data should be configured.
Does your software do testing for 'Cross-Tested' or 'New-Comparability' plans?
Yes! 401ktest.com can help with Cross-Testing.
401ktest.com won’t systematically segregate your employees into groups, but there are a couple options if you want to do cross-testing:
- You can upload separate groups for testing. The software is designed to upload employee data quickly, and
delete employee data quickly. So you can upload the group, run the tests, print the spreadsheet, and delete the group in just minutes!
This option would work best if you have 50 or more employees in your group.
- You can also use the drag-and-drop feature to pull certain employees out of a test – Just move them to the ‘ineligible’ group and their
data will have no bearing on the test. If your company has a handful of employees, this option might be the fastest.
Drag-and-drop is an routine we added to the testing process for convenience: You can instantly move an employee from one category to another!
The drag-and-drop feature doesn't permanently change the employee's status: It only changes an employee's status for the test you are
performing. This is a very powerful feature for funning proforma testing like New Comparability, etc.
DO YOU RECOMMEND SAFE-HARBOR PLANS TO YOUR CLIENTS?
NO! Almost never!
In most cases, the safe harbor provisions are a poor use of a company's benefit dollars.
Safe-harbor provisions are a government statute; so there shouldn't be any expectation that a safe-harbor design is a good
use of a company's limited benefit dollars!
Can You Suggest Some Alternative Match or Profit-sharing Formulas?
Certainly!
(Designing benefits and compensation plans) is an art rather than a science. You have to look at the company's unique qualities and then
create an affordable plan that provides a benefit that employees regard as valuable. This is important to note: If the employees don't feel they are
receiving a valuable benefit, then there's no good reason to incur the cost.
Here's the challenge for small businesses. Officers and directors may perceive benefit values much differently than other
employees; yet most small businesses don't provide separate retirement benefit plans for Officers v Other employees. A single
design has to work for everyone.
Here are some affordable 401k plan design suggestions (and comments) for your consideration:
No match!
If a majority of your work-force is young and perceives little value for retirement dollars, don't offer a
match. I'd still strongly suggest offering a 401k plan for the few employees that want to participate though.
I once worked with a company where half the officers and most of the employees didn't care about retirement.
Some Investment analysts would say there's some education that should take place in situations like this (Make them want it!):
I don't agree with this approach; so I suggested they offer a plan with no match, and use their benefit dollars to beef up the
year-end bonuses.
You can always let employees but their bonus in the 401k plan if they want!
25 - 50% match for up to 10% of withholdings.
This is the antithesis of the first suggestion. If you have a work force that values retirement, then give it to them!
A few notes about this kind of match formula:
- I rarely suggest a $1 for $1 match.
Very few people fully appreciate a match of this magnitude.
Matching up to 10% favors lower paid employees who want to maximize their 401k.
Many HCEs can't
withhold at this high a percentage - The maximum compensation (for the match formula) is $245,000, but the withholding
limit is $16,500; which is only 7%.
So the higher match will favor the lower paid employee who has the foresight to
prepare for retirement. This type of employee is usually a good worker, in my experience.
Matching up to 10% will help HCEs by raising the ADP/ACP limit
There will be a few employees who will take advantage of the higher percentage, which will raise the overall limit.
Discretionary match based on company profit.
I would partner this type of plan with some type of after-tax bonus plan. This will provide incentive for retirement
minded people, as well as those who think they're going to live forever and always have the energy to work full-time.
Here are a couple other suggestions for your consideration:
Don't provide a Profit-sharing contribution.
Employees who don't choose to participate in the 401k should
not have retirement funds allocated to their accounts. In doing this, you are spending money that is not adequately appreciated.
This suggestion assumes that you offer a 401k of course.
Have the admin fees paid by 401k funds. Don't have the company pay them!
If the company is going to contribute anything
to the 401k, it should in the form of a match. Test my thesis by asking yourself which statement sounds better:
"Our company pays our 401k admin fees for us! Yea!"
"Our company matches our 401k contributions! Yea!"
The match is more popular almost 100% of the time!
You may be thinking, "Why not do a little of both?". If so, then consider this: Why not increase the match?
EMPLOYEE FILES ARE SOMETIMES LISTED TWICE AFTER I UPLOAD NEW PAYROLL DATA.
What's going on? How do I fix this?
If there has been any change to an employee's name or ID number, they will be uploaded as a new employee - essentially causing them
to be listed twice. The change could be the smallest thing, like a comma or period added to the name.
Here are a couple ways to fix this, or prevent it from happening:
- You can delete a single employee by clicking 'Delete Employee' on the left menu bar.
Go to 'Edit Employees';
pull up the duplicate employee file;
click 'Delete Employee';
then follow the prompts.
- Before uploading more current employee data, you can click 'Delete Employee Data' on the menu bar and follow the prompts.
- This option will delete all employee data for all years.
- Since data can be imported in seconds, this doesn't really cost you time, even if you are using the prior-year-method.
- Once import files are configured properly, it only takes seconds to import them, or re-import them.
A LARGE CONSULTING FIRM FINDS MULTIPLE MISTAKES IN THEIR DATA!
Our site is designed to help companies with 200 employees or less, but a temp. agency (with 8,000 employees) decided to try our software.
They ran a test and got the same disappointing results as the test performed by their payroll processor. So they called and asked us to
review the test for them.
When we reviewed the data using "Employee Report (xls)", we found dozens of employee records with incorrect start dates and birth
dates - either that or they hired a bunch people on day they were born - 1/107 and 1/1/06. As a result, many employees (who should have been
included in the test) were categorized as ineligable, including HCEs and Non-HCEs who were participating in the 401k plan!
This is an easy mistake to make!
HR departments get busy and enter phony dates in required fields all the time; with every intention of
correcting them later. This is just something to be aware of and watch out for.
It's also an easy mistake to find.
After you have uploaded your payroll data, choose the "Employee Report (xls)" option on the menu:
Sort your data by start date, hire date, (etc.) to see if any unusual results are found.
Do you have any employees that are less than 14 or more than 100 years old according to your records? Are there any employees with less
than 'o' years of experience? If so; you'll probably get some interesting ADP/ACP test results!
MAY I HAVE A REFUND!
No; we generally don't allow a refund for the single-user license.
But if you buy a multiple user license and change your mind within 3 business days, we will convert it to a single
user license and refund the balance.
We had our 2nd request for a refund recently (We've been in business since 2007!).
I told the client we don't allow refunds, but since they asked only 30 minutes after
signing up, I would allow it. Then I found out the client had already uploaded their data and performed their first test.
In the client's 2nd E-mail they wrote: "Your test doesn't agree with the test done by our TPA. They charged almost $1,000 for the test,
so we're going to trust their results. We were hoping to find a less expensive testing alternative for next year."
Based on this information, I took back my offer to give the client a refund.
The client then reviewed the data a little closer and found that they had put company contributions in the wrong column. When they reconfigured
the data in Excel and uploaded it again, the test results were exactly the same as those received from the expensive firm.
I suggested they still use the firm for year-end testing, but then use the firm to review 401ktest's results for interim testing.
This drastically reduces the cost of each interim test, enabling the company to test more often!
HOW MANY TESTS CAN I RUN WITH A SINGLE-USER LICENSE?
As many as you want!
A client signed up thinking they were only getting one test for the subscription price. After running their first test, they noticed they
were still able to sign in and upload new data. So they called and asked, "how many tests can I run?".
There's no limit to the number of tests you can perform with 401ktest.com.
We sell our service as a subscription, which gives you access to the Testing Software and our Educational material. The price is so low,
because we want everyone in the small business community to have affordable access to our high quality interim testing program.
Tell your friends!
WILL YOUR SITE DO THE TOP-HEAVY TEST and other tests required by most 401k plans?
If not; can you suggest a web-site that does?
Short answer:
No; but we provide detailed instructions for performing several tests, including the Top-Heavy test. The instructions become available on
our terminology page when you buy a subscription.
Details:
My site provides detailed instructions on how to perform thE Top-Heavy test, but we are not planning to create a testing process. The Top-Heavy test
is easy enough to perform, but it requires much more than an upload of payroll data, and there is a great deal of evidence gathering. Each Top-heavy test is
practically customized because there are so many variables. By the time you gather the information you need to perform the test, the rest is
somewhat easy. The trick comes in learning the clients situation and gathering the proper data like:
- What was rolled into the plan and when?
- Ownership %’s
- All immediate relatives of 5% owners
- Etc.
Can I suggest a Site that helps you perform the Top-Heavy test? Currently; no. Everyone who has taken the time to create a systematic test is charging a great deal of money for it – even
though the product won’t really save time. I suppose it will provide some comfort, but the test results will only be as good as the data that
was gathered and entered.
FT William has been promising to come out with a comprehensive and affordable testing site. It’s already more than a year past the original
release date, but the latest unofficial release date was Spring, 2009. The price-point is rumored to be $5,000, or a little less.
I talk with FT William executives ocassionally, and I have a great deal of respect for them. When they decide their product is good
enough to launch, I’m confident it will be:
better than everything else out there.
3 times more affordable
too expensive for the small business community. Don’t misunderstand: This will be a great product for larger TPA firms! Companies with 250
clients or more.
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