What if I (or my employees) don’t want to be automatically enrolled in the plan?
No problem. Participants can opt out anytime by choosing the opt-out option in their online account under “Manage Deferrals.” By making enrollment “opt out” rather than “opt in,” automatic enrollment helps increase employee participation, potentially encouraging them to start saving for retirement sooner.
What happens if my company grows over 100 employees?
When your eligible employees exceed 100, your plan may become subject to an independent annual plan audit. When your plan becomes subject to audit requirements, we will inform you and work alongside you and the auditors to complete this annual audit.
What if an employee leaves their job? Is there a penalty?
If an employee leaves your business, they’ll need to decide what they want to do with their 401(k) account. They can keep the money in the plan, move it to a new employer’s plan, move it to a self-directed retirement account (also known as a rollover IRA), or cash out.* Former employees may stay invested in your 401(k) plan indefinitely if their balance is at least $5,000.
*If an employee takes a distribution (“cashes out”) before reaching age 59-1/2, the IRS generally requires automatic withholding of 20% of a 401(k) early withdrawal, which will be used to offset whatever they owe in federal taxes. They may owe applicable state and local taxes as well. The IRS will also assess a 10% early withdrawal penalty, if applicable.
As a business owner, do I have to participate?
No. However, it’s a great way to receive the same benefits as your employees. For example, you can defer paying taxes on any pre-tax contributions you make, and you can take advantage of any matching contributions that are offered. You may contribute up to $19,500 (up to $26,000 if you are age 50 or older) for the 2020 tax year. Note: You will be automatically enrolled unless you opt out by choosing the opt-out option in your online account.
What are the plan fees, and who pays them?
The business owner pays:
$500 one-time setup fee.
$150 per month recordkeeping fee ($450 billed quarterly).
The participants pay:
$6 per participant, per month recordkeeping fee for each participant with an account balance over $100. This is deducted from participant accounts monthly. You (the business owner) may elect to pay it quarterly on behalf of the participants.
Financial professional fee, if you choose to work with one. If the financial professional bills you (the business owner) directly, you will pay this fee. If the financial professional chooses to be paid out of plan assets, this fee will be deducted quarterly from participant balances in the plan on a pro-rated basis. The plan must have a balance of $5,000 at the end of each quarter or no fee will be applied.
The participants pay:
Custodial and investment fees, which are charged against participating employees’ accounts (those vary by investment and range from 0.05% – 0.70%, as of May 1, 2020). Custodial fees are up to 0.055%.
How do contributions work?
Contributions are deposited by the plan sponsor (you) or the employees (participants). While employee contributions are elective to the employee, some employer contributions may be required by the terms of your plan.
Participants contribute their elected deferral (a percentage of their pay they have selected) each pay period.
If offered, business owners can match up to 10% of participant contributions for the plan each pay period.
How and when are the fees billed?
On the first day of the month after you sign the required documents and purchase the plan, the one-time $500 setup fee and your first three months of plan fees will be charged to the payment method you have entered. If your purchase is completed on the first day of the month, you will be charged the same day. The same payment method will be charged on the first day of the month every three months thereafter for three months of the $150/month recordkeeping fee (a total of $450), and if elected, three months of the $6/month per participant fee ($6 x number of participants x 3 months). If applicable, the financial professional’s fee will be deducted quarterly from participant accounts.
Specific deadlines apply to safe harbor plans, and this may impact billing and subscription effective dates (e.g., if the business owner subscribes to a safe harbor plan after Oct. 1, the plan effective date and initial quarterly billing will occur on Jan. 1).
What exactly am I getting for the fees?
Recordkeeping fees cover the cost of maintaining the plan. This includes services such as:
Annual compliance testing
Government filing and reporting of required documentation
Ongoing recordkeeping (e.g., tracking which employees are participating and the amount they’ve invested in each of the plan funds)
Automated participant signup and onboarding
An online platform for plan administration and participant account management 24/7
A fund lineup selected and managed by Wilshire Associates, a registered 3(38) investment fiduciary
A dedicated phone number for questions
Bond (insurance) coverage of the plan’s assets up to $250,000
Access to Edu(k)ate’s financial wellness platform for all employees (regardless of eligibility)
Investment fees cover the cost of managing the investments, including operating expenses, management fees, and administrative fees. Custodial fees cover the services of the financial custodian, such as holding plan assets in an account for safekeeping, collecting dividend and interest income, and providing account statements.
What’s the “Simply Retirement by Principal® planner” and who is it for?
The “planner” is a simple series of questions where you or your financial professional will fill in a few details about your business and make selections to create a Simply Retirement by Principal® plan proposal. Anyone can use the planner to see what a plan might look like for a business—just choose your role (business owner, financial professional or “just looking”) and answer the questions. The plan proposal you create can be saved, shared, and edited up to 30 days after it was created. Keep in mind that financial professionals and business owners can create a plan design, but only a business owner can complete the purchase.
How long does it take to answer the questions and create a plan/proposal?
On average, 15 to 20 minutes is a reasonable estimate, but your experience may vary. There are about 15 questions to answer (a few more if you are a financial professional). You may need to take some time to look up information, consult another person on your team, or think about some of your selections in the process.
If you close out of the planner before saving your plan, you’ll see a button at the bottom of your screen that says “You have a plan in progress.” As long you have the website open, you can click this button to pick up where you left off. If you want to leave the site and come back later, you’ll need to finish the questions, save your plan design, and save the link to be able to return and edit your answers. Plan designs are saved for 30 days.
What if I don’t have a financial professional?
A few states, including Florida, Georgia, and Texas, require business owners to work with a financial professional to set up a 401(k) plan. If your business headquarters is in one of these states, you’ll be prompted to provide your financial professional’s contact information and the Principal® team will follow up with them.
If you’re in a state that doesn’t require a financial professional, it’s up to you. If you’re comfortable completing the steps, you can fill out the online planner and complete the purchase yourself. A team of people is just a phone call away if you have questions. If you’re not comfortable doing it on your own, you might consider working with a financial professional. Many businesses find it helpful to have a professional’s expertise when it comes to understanding unfamiliar terms and weighing their options.
How do I find a financial professional?
If you aren’t engaged with a financial professional, but are interested in working with one, please contact the Retirement Sales Support Team at [email protected] for assistance.
Is there someone I can contact if I have questions?
What credentials does Simply Retirement by Principal® require for financial professionals to receive compensation through the retirement plan?
Simply Retirement by Principal® is a group variable annuity product offering which requires both FINRA registration and variable annuity line insurance licensing in order for a financial professional to receive compensation through the retirement plan. Principal will research required financial professional licensing and registration beginning with the National Producer Number (NPN) which all variable annuity insurance licensed professionals are assigned.
I’ve noticed Principal, Ubiquity Retirement + Savings®, and Wilshire Associates, Inc. mentioned on this site. What are their roles and how do they fit in?
Principal is the distributor and investment manager of the investment options for Simply Retirement by Principal®. Ubiquity provides the plan recordkeeping and administrative services once you purchase the plan. You and your participating employees will also use Ubiquity’s digital platform to manage your plan. You can read more about our collaboration here.
Wilshire & Associates, Inc. will be the plan’s 3(38) investment fiduciary responsible for selecting and monitoring the plan’s investment options. Wilshire Associates, Inc. is an independent investment management firm that manages capital for more than 600 institutional investors globally, representing more than $8 trillion of capital.
Who handles testing and reporting?
Ubiquity's team of compliance experts perform annual nondiscrimination testing. Ubiquity also helps business owners stay on top of annual government form filings and documentation—like IRS Form 5500, 8955-SSA preparation and filing, participant disclosures, and annual plan notifications.
What makes Simply Retirement by Principal® a different kind of solution?
Simply Retirement by Principal® is the first 100% digital 401(k) plan solution from Principal®. Here are a few key features that set it apart:
What’s the value of a 401(k) plan to my employees?
First and foremost, it gives them an easy way to save for retirement. Contributions are automatically deducted from employee paychecks each pay period, so they don't have to budget separately for setting money aside. They also have an opportunity to take advantage of any matching contributions you may offer, making it possible for them to save more. Plus, pre-tax contributions are deducted from paychecks before income taxes, reducing individual taxable income, and taxes are deferred on any investment gains and earnings until the money is withdrawn in retirement.
Do participants have the option to defer Roth contributions with this plan?
Yes. By default, auto-enrollment contributions are only pre-tax contributions, but participants can choose to make both pre-tax and Roth contributions to their 401(k) plan from their dashboard once they set up their online account.
What’s the vesting schedule for this plan?
Employees are 100% vested in the 401(k) plan immediately.
Are loans available with this plan?
Yes. Participants can request to take one loan from their 401(k) plan balance and select a loan repayment schedule that best suits them but is no longer than five years. Participants may repay a loan to up to 30 years if the proceeds are used to purchase their primary residence. Only one loan may be outstanding at a time. Loan repayments are made via after-tax payroll deductions. The interest portion of the loan payment is applied to the participant’s account.
What is payroll integration and how does it work?
Payroll integration connects your payroll provider directly to your 401(k) plan. Depending on your payroll provider, each pay period, they will automatically share your employee's contribution information to the Simply Retirement by Principal®/Ubiquity recordkeeping system.
How can I get more information on the investments?
See this page. There’s a listing of investment options under each asset class, and you can click any investment option for fact sheets and other details.
What happens after I commit to purchase the plan? What can I expect during the onboarding process and beyond?
When you click the “Complete your purchase” button from the “Review Your Plan” page, it will take you directly to the Ubiquity Retirement + Savings® website, where you’ll:
Confirm your login and set a password.
Provide some additional details about your business.
Sign required documents electronically.
Pay a $500 one-time setup fee (non-refundable).
After you sign all the required documents, you’ll be able to configure your account to activate your plan:
Once your plan is set up and employee data (census) is entered into the system, eligible employees will also receive a welcome email with instructions to set up and log into their online accounts, and begin selecting their investments. To help plan administrators and employees along this process and afterwards, there are a range of instructional videos, webinars, guides, and checklists, including an enrollment kit for employees. Ubiquity’s Customer Success Team can be reached by phone, email, or chat for additional support.
How can I get support to set up my plan?
Every new plan is assigned an Implementation Specialist by Ubiquity to ensure the plan is set up correctly, and to help process the first employee census and payroll contribution.
Monday–Friday, 8 a.m. – 4 p.m. PST
How do I get support after my plan is set up?
The following Customer Success Teams are available:
Monday–Friday, 6 a.m. – 5 p.m. PST
Monday–Friday, 8 a.m. – 5 p.m. PST
Financial Professional Support
Monday–Friday, 6 a.m. – 5 p.m. PST