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Frequently Asked Questions by Sponsors

How do I know what type of plan is right for my company?
It’s best to sit down with a retirement plan specialist to discuss your objectives, both as an employer and an employee, to determine what plan design best fits your needs. To set up an initial consultation with a Savant representative, please call 815-227-0300 and ask for a Savant retirement plan specialist.

What is a participant directed account?
The employee decides how to invest their account balance. It is the employer’s responsibility to offer a variety of prudent investment options so that the employee can make investments according to his or her long term goals and risk.

Who is a plan fiduciary?
A plan fiduciary is a person (or company) that has legal responsibility for managing and/or supervising the processes and money associated with a retirement plan. See the Fiduciary Consulting page for further information.

What is compliance testing?
The IRS mandates tests that compare contribution levels and actual amounts made by different classifications of plan participants. The four most common tests that must be passed by 401(k) plans are the Actual Deferral Percentage (ADP), Actual Contribution Percentage (ACP), Minimum Coverage Test, and Top-Heavy Test.

What types of contributions are allowed within a plan?
Retirement plans can provide for 4 types of contributions: employee contributions (salary deferrals or 401(k) contributions); employer matching contributions based on employee contributions; employer profit sharing contributions; and rollover contributions. The plan design will define the type of contributions available within a specific plan.

What is the difference between traditional and daily recordkeeping?
Traditional recordkeeping, also known as Balance Forward, typically uses accrual accounting to report plan activity after the period (annual, semi-annual, quarterly, or monthly) has ended. Depending on contribution timing, account values may be reported several months following the end of the period. Daily recordkeeping typically uses cash accounting, reporting plan activity as it occurs, making current account values available to plan participants on a daily basis.

Why should my company offer a 401(k) plan?
A 401(k) plan can help you attract and retain quality employees allowing them to save for retirement. It also provides tax benefits to reduce your current taxable income. Not to mention that it helps you secure your own retirement.

What is a 401(k) Plan?
You may be surprised to learn that a 401(k) plan is not a plan at all. It is an add-on feature of a profit sharing plan, allowing a participant to make contributions through payroll deduction. The creation of this feature is found in section 401(k) of the IRS code, hence the name given to this provision.

What is a qualified plan?
A qualified plan is a private retirement plan that meets the rules and regulations of the Internal Revenue Service. Contributions to such a plan are generally tax-deductible.


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