How To Complete The Year-End Questionnaire

Year-End Questionnaire Walkthrough Video

Vestwell takes care of many of the administrative tasks for the plan on your behalf, one of which is filing an annual tax form to the IRS called Form 5500, which is an informational tax filing. In order to file the annual Form 5500 on your behalf, there are certain questions that we are required to ask. Please use this guide to help answer these questions as best you can, and email us if you need additional assistance.

Here are the questions we will be covering:

  1. What is your company entity type?
  2. What is your Business Activity Code?
  3. Has the company or any of its subsidiaries purchased or been purchased by another company during the plan year being tested?
  4. Did any long-term "temporary" or leased employees (i.e., from a Professional Employer Organization) perform services for the Sponsor for more than 1,000 hours during the plan year?
  5. Will you be applying for an extension on filing your corporate tax return?
  6. What is the amount of your fidelity bond coverage?
  7. Does the company have an employer retirement plan other than this one?
  8. Were any fees, commissions, or anything of value paid to any broker, agent, or other individual or organization that provides fiduciary services to the plan?
  9. Did the plan hold any assets outside of Vestwell as of the last day of the plan year?
  10. Is the plan sponsor part of a "Controlled Group" (CG) or an "Affiliated Service Group" (ASG)?
  11. Do the owners of the company own any other businesses?
  12. If you answered "Yes" to the question above, are all companies in the Controlled Group or Affiliated Service Group participating in the plan and included in the annual census file?
  13. If you answered "Yes" to the question above, do the other businesses have employees?
  14. Were there any nonexempt transactions with any party in interest? This information is used to complete Form 5500 (retirement plan tax filing).
  15. Did the plan have a loss that was caused by fraud or dishonesty?
  16. Has the plan failed to provide any benefit when due under the plan?
  17. Were there any blackout periods during the plan year?
  18. If you answered “Yes” to the question above, did you provide the required notice (or did one of the exceptions to providing the notice apply)? This information is used to complete the annual return for the plan.
  19. Are you planning on making (or have you already made) a discretionary match for this plan year?
  20. If you answered "Yes" to the question above, please enter the formula you want to use for the discretionary match. For example, "50,000.00" or "100% on 1st 3%, 50% on next 2%.”
  21. Are you planning on making a profit-sharing contribution for this plan year?

1 - What is your company entity type?

Is your organization a corporation, limited liability partnership, or another entity type? The type of organization affects the calculation of benefits payable to participants, profit-sharing calculations (if applicable to your plan), and the due date for filing corporate tax returns. For example, if your organization is an LLC (limited liability corporation), we need to know how the LLC is taxed: as a C-corporation, S-corporation, or partnership.

The company entity type can be found on your Articles of Incorporation or past corporate tax filings.

2 - What is your Business Activity Code?

The IRS asks for the company's business activity code on Form 5500. In addition, knowing the type of business the employer sponsors can help Vestwell design the best plan for you and your employees.

You can find this number on your tax filings or by consulting with your accountant or tax advisor.

3 - Has the company or any of its subsidiaries purchased or been purchased by another company during the plan year being tested?

The merger, acquisition, and certain other types of corporate transactions could affect the operation of the plan and trigger the need to conduct additional compliance testing or other requirements. Therefore, Vestwell should be informed of any corporate transactions.

4 -  Did any long-term "temporary" or leased employees (i.e., from a Professional Employer Organization) perform services for the Sponsor for more than 1,000 hours during the plan year?

If so, these employees will need to be included in compliance testing. Therefore, if you answer yes to this question on the year-end questionnaire, you will be required to upload a census for these employees in order to complete the questionnaire. This will allow us to proceed with the compliance testing.

5 - Will you be applying for an extension on filing your corporate tax return?

If you wish to take a deduction on your business taxes for your retirement contributions, all employer contributions (profit sharing, safe harbor, discretionary match) must be deposited by the time your business taxes are filed. If you plan on filing your business taxes without an extension and wish to have Vestwell calculate an employer contribution in addition to what was deposited during the plan year, the checklist needs to be submitted at least three weeks prior to your business tax deadline. If you apply for an extension on the business tax return, the due date for the employer contribution deposit is extended to the filing date.

6 - What is the amount of your fidelity bond coverage?

The IRS requires every person or organization that handles the plan assets (has discretion or responsibility regarding assets) to be insured with a fidelity bond that will protect the plan in the event that there is any misuse of plan assets or other improprieties. Your fidelity bond is required to be for at least 10% of the total plan assets. Your fidelity bond certificate states the amount of coverage that will be reflected on your Form 5500. The Vestwell Plan Services Agreement states that the sponsor is responsible for obtaining & maintaining a Fidelity Bond. 

7 - Does the company have an employer retirement plan other than this one?

Sponsors must disclose to Vestwell all plans that they sponsor directly or indirectly (through a Controlled or Affiliated Service Group). Some examples of other retirement plans are Cash Balance plans, SIMPLE plans, SEP plans, or another 401k plan. Sponsoring another plan affects compliance testing and can help Vestwell design the best plan for you and your employees.

8 - Were any fees, commissions, or anything of value paid to any broker, agent, or other individual or organization that provides fiduciary services to the plan?

This information is used to complete the annual return for the plan. You do not have to include any fees paid to Vestwell or your Financial Advisors.

9 - Did the plan hold any assets outside of Vestwell as of the last day of the plan year?

Vestwell must disclose all plan assets to the IRS on the annual Form 5500, including any non-cash assets. There are also certain IRS regulations regarding non-cash assets held in the name of the retirement plan.

Some examples where this may be true:

  • If plan contributions were held in a bank account that was not on the Vestwell platform.
  • If real estate is held or owned by the Plan.

10 - Is the plan sponsor part of a "Controlled Group" (CG) or an "Affiliated Service Group" (ASG)?

A Controlled Group of businesses is a group of related businesses that have a certain amount of common ownership per IRS regulations. If a Controlled Group exists, the employees of those businesses are considered together for Retirement plan purposes.

An Affiliated Service Group exists when entities have common ownership attributes and perform certain services with or for each other. An ASG determination has the same effect as the Controlled Group determination.

These rules exist to prevent employers from setting up multiple entities to avoid paying certain employees benefits they normally would have to pay to meet the qualified plan requirements. If you are unsure if you fall into either of these categories, your accountant will be able to assist you in making the determination. Click here to read our article "Controlled Groups and Affiliated Service Groups." 

10a - Do those other businesses have employees?

If there are employees associated with the Controlled Group or Affiliated Service Group, we must include any of those employees in compliance testing. If they are not currently participating in the plan and not included on your year-end census, you will be required to upload a census for the employees to the checklist.

10b - If you answered "Yes" to the question above, are all companies in the Controlled Group or Affiliated Service Group participating in the plan and included in the annual census file?

If the sponsoring employer is in a Controlled Group or Affiliated Service Group, it affects the retirement plan significantly. Vestwell is required to notify the IRS of your plan's annual return. 

If you are unsure of the answers to these questions, your accountant will be able to assist you.

11 - Were there any nonexempt transactions with any party in interest? This information is used to complete Form 5500 (retirement plan tax filing).

“Party-in-interest” could be any of the following:

  • A fiduciary of the plan: including, but not limited to, any administrator, officer, trustee, counselor, or employee.
  • A person providing services to the plan.
  • An employer whose employees are covered by the plan.
  • An owner (individual or corporation, partnership, trust, or estate) who directly or indirectly owns 50% or more of the plan sponsor.
  • An employee, officer, or director of the plan sponsor
  • A lineal relative of any of the above.

“Nonexempt transactions” could be any of the following:

  • Sale, exchange, or lease of any property between the plan and a party-in-interest.
  • The lending of money or other extensions of credit between the plan and a party-in-interest(excluding participant loans).
  • Furnishing of goods, services, or facilities between the plan and a party-in-interest.
  • Transfer to, or use by, or for the benefit of, a party-in-interest of any income or assets of the plan.
  •  Acquisition, on behalf of the plan, of any employer security or employer real property.
  • Self-dealing with the assets of the plan for a fiduciary's own interest or own account.
  • Acting in a fiduciary's individual or any other capacity in any transaction involving the plan on behalf of a party whose interests are adverse to the interests of the Plan or the interests of the participants or beneficiaries.
  • Receipt of any consideration for their own personal account by a party-in-interest who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.

12 - Did the plan have a loss that was caused by fraud or dishonesty?

This information is used to complete the annual return for the Plan.

13 - Has the plan failed to provide any benefit when due under the plan?

This information is used to complete the annual return for the Plan. This would include any contributions that are required per your Plan document that have not yet been deposited.

14 - Were there any blackout periods during the plan year?

14a - If you answered “Yes” to the question above, did you provide the required notice (or did one of the exceptions to providing the notice apply)? This information is used to complete the annual return for the plan.

Blackout periods occur during a conversion to a new platform or custodian, so if you converted to Vestwell in the middle of the Plan Year, your Plan likely had a blackout period. In that case, your prior provider should have provided you with the required participant notices.

15 - Are you planning on making (or have you already made) a discretionary match for this plan year?

If your plan has a Safe Harbor or Fixed Match feature, select no to this question. You may make a matching contribution to your eligible employees who have been deferring to the plan. This may apply in either of the below situations:

  • The sponsor has not been making matching contributions throughout the plan year but wishes to do so.
  • The sponsor would like to make a matching contribution in addition to any matching contributions made during the plan year.

15a - If you answered "Yes" to the question above, please enter the amount or formula you will use for the discretionary match. For example, "50,000.00" or "100% on the first 3%, 50% on the next 2%.”

Vestwell will calculate the discretionary matching amount per employee once all three parts of the checklist have been completed and any discrepancies resolved. It generally takes a few weeks to provide the calculation once the checklist has been completed. Since this contribution is deductible on your corporate taxes, please plan accordingly with your accountant.

*If you wish to have Vestwell calculate your contribution and have it deposited by the time you submit your business taxes, the checklist must be submitted at least three weeks prior to your business tax deadline.

16 - Are you planning on making a profit-sharing contribution for this plan year?

A profit-sharing contribution is an optional employer contribution provided to eligible employees at the end of the year, and it is tax-deductible for the employer. They can be an appropriate way to reward eligible employees, retain talent, and maximize retirement plan benefits for the company owners.

While elective deferrals are limited to $22,500 per person for 2023 ($30,000 including catch-up contribution), profit-sharing contributions have an individual limit of $66,000 per person (this limit includes elective deferrals. $73,500 including catch-up contribution.)

If you choose to make a profit-sharing contribution, Vestwell will calculate the amount for each participant once all sections of the checklist are completed and the Vestwell data review has been completed.  *If you wish to have Vestwell calculate your contribution and have it deposited by the time you submit your business taxes, the checklist must be submitted at least three weeks prior to your business tax deadline. 

Once the calculation is completed, we will send a contribution report and upload the file directly to your email and prompt you to review the report, along with instructions on how to submit the contribution.