Chapter 2

Understanding Your Company Plan

Getting Started Using 401(k) Easy^™

At this point, we assume that you’ve familiarized yourself with the contents of the CD-ROM, that you’ve run the demonstration often enough to feel comfortable with the software, that you’ve transferred the contents of the CD-ROM onto your hard disk and customized it with your plan-specific information via your 401(k) Easy^™ license diskette. (For regular operations, you must work from the 401(k) Easy^™ software on your hard disk. You cannot save any information on the CD-ROM.)

You should first make a backup copy of all the 401(k) Easy^™ files and folders. You can do this through use of the “Backup Data File” option in “Utilities” in the 401(k) Easy^™ main menu, “Welcome to 401(k) Easy.” Just follow the instructions after you click on Backup Data File.

You may also want to print out a copy of each of the forms and documents you’ll be using in running the company plan. All the 401(k) Easy^™ forms are in Reports; just click on Reports in the 401(k) Easy^™ main menu window. Then click on All Reports in the left-hand column, and scroll down the right-hand column until you reach the report you want to print out. Highlight it, then click on Print. (See the page following for how to choose between viewing a report on screen or printing out a hard copy.

Before you hand any form or document over to an employee, you should read through it carefully and make sure you understand its content. There is a lot of useful information in these forms that you should know. Besides, you probably will have to explain the content to the employee(s); it’s much easier to sound knowledgeable when you really are knowledgeable!

Verifying Your Customized Software

Your 401(k) Easy^™ software is customized to match your 401(k) plan. In addition to basic company information (company name, address, telephone and fax numbers, and tax identification number), we’ve told the program whether or not to accept matching contribution entries and what vesting formula to apply to any such contributions based on the designations your company has made for its plan.

You should check the accuracy of this information IMMEDIATELY. Do not wait until it’s time to use your software to process 401(k) contributions. As was mentioned previously, this information is hardwired into your 401(k) Easy^™ system; to change anything you must contact us.

So let’s introduce you to the 401(k) Easy^™ system that contains all these data.

Introduction to 401(k) Easy^™

After a few seconds on the “splash” screen, 401(k) Easy^™ opens on the main menu, “Welcome to 401(k) Easy”. We’ll go through all the items on this main menu in order, but first, let’s go to “Printer” and “Screen at the bottom of the menu.

Screen is the default choice. When it is selected, all information, including all reports, appears on your screen. The ability to “print” to the screen allows you to view the output quickly and without wasting paper, as some reports are many pages long.

At many points, you also have the choice of printing out a copy of the grid, report, or whatever is contained within the window. When this choice is available, a Print or Proof button will be an option within the menu at the bottom of the window.

When you select Print at the “Welcome…” screen level, 401(k) Easy^™ automatically sends final information straight to the printer, rather than showing you an on-screen version first. You usually won’t want to do this. You may, however, want to print a report after viewing it on the screen. Reports displayed on the screen can be sent to your printer by pressing “Ctrl-P.”

Company Information

The first button on the “Welcome. . .” window, “Company Information,” contains the specific data about your company’s 401(k) Easy^™ plan that we referred to previously.

Important! If you see any problems, contact us

IMMEDIATELY. The program will not allow you to make any adjustments yourself to any of this fundamental information because, theoretically, you could make a change that would constitute a “change” to your plan in the eyes of the IRS and that could therefore jeopardize your plan’s IRS-qualified status.

Employee Information

The second button of the “Welcome…” window is “Employee Information”. 401(k) Easy^™ uses the information you enter about each of your employees eligible to participate in the company plan to correctly process subsequent 401(k) contributions.

Important! You must have an entry for every employee

eligible to participate in the plan, regardless of whether or not the employee chooses to participate. The IRS has certain requirements about balanced participation among lower and higher-paid employees. If you don’t have entries for every eligible employee, 401(k) Easy™’s top-heavy and other IRS­requirement testing functions will not be accurate. Deleting an employee is (or should be) a rarity. It deletes all records for that employee, which is usually not desirable.

Processing

Clicking on Processing (the third button of the “Welcome . . .” window) offers six options:

·    Process Monthly Contributions

·    Reprocess Monthly Contributions

·    Edit Posting Period

·    Update Monthly Salaries

·    Update Year-to-Date Salaries

·    Batch Processing

“Process Monthly Contributions” is used to process new monthly contributions; “Reprocess Monthly Salaries” to review or reprocess contributions for a prior month; “Edit Posting Period” to change the month transactions were posted to investment accounts; “Update Monthly Salaries” to update employees’ earnings for a specific prior month; and “Update Year-to-Date Salaries” to make adjustments to salaries at the end of the year to ensure that the salary data are correct for end-of-year compliance testing. These activities are described in detail in Chapters 4 and 8.

Batch Processing is used to work on a group of the same type of adjustments, such as trust-to-trust transfers into the plan [typically when one employer absorbs a group of employees and their 401(k) savings from another company]. It lets you make entries for multiple employees, then process them all together (whereas if you go through the “Employee Information” window you have to do each employee separately, processing each before moving on to the next).

Reports

“Reports,” the fourth button of “Welcome…” window, is used to access the myriad of reports that 401(k) Easy^™ compiles from posting and cross­referencing all the entries you put in each month. Chapter 9 in the 401k Help^® CD-ROM describes these reports.

The 401(k) Easy^™ system also contains a number of forms and documents that are not reports per se, but that are critical to administrating your 401(k) plan and are included under “Reports”; some of these are customized to your company’s plan and others need no customization.

Major forms you will be using include the following:

·    The Enrollment Pac is used for initial enrollment and investment selection, or for changes in any of the enrollment designations: change of personal information (name, address, etc.) change in marital status, change of beneficiary or change in investment selection (whether it is a change in investments or just a change in the percentages of deferrals going to the same set of investments),

·    The Loan Pac is used when a participant wants to take out a loan against his or her plan balance.

·    The Hardship Withdrawal Pac is used when a participant wants to apply for a hardship withdrawal of funds in his or her account.

·    The Distribution Pac is used when the participant leaves the 401(k) plan, whether at retirement, termination of employment, or for another reason.

The forms associated with each chapter are listed at the end of that chapter. How they are used is described in the chapter.

Utilities

“Utilities” has six options:

·    Click on Repair & Compact to clean up your program; it should be done weekly if the volume of activity is large, monthly if the volume is low.

·    When you click on Backup Data File you will first be asked if you want to repair and compact the database; it’s a good idea to say yes. Then you will be asked to type in the location to which you wish to back up the data.

·    Selecting “Zip Data File to Diskette(s) compresses your 401(k) Easy^™ data file to floppy diskettes.

·    Selecting “Unzip Data File from Diskette(s)” uncompresses your 401(k) Easy^™ data file from floppy diskettes.

·    “Change Passcode:” Select this option to change the 401(k) Easy^™ system password. If you set a password, anyone wishing to use the 401(k) Easy^™ system will be required to enter the password upon first launching the software.

Click on Change Passcode. 401(k) Easy^™ comes without a default password. To enter yours if you want it, type whatever alphanumeric password you want in the middle cell, retyping it in the bottom cell as confirmation. Click OK to set the new code into the program and return to the “Utilities” window.