Frequently asked questions

Enrollment and fees

Why do my employees get automatically enrolled?

The Simply Retirement by Principal^® 401(k) plan requires employees to be automatically enrolled at a default pre-tax contribution percentage set by you. Per the SECURE 2.0 Act of 2022, new plans after December 31, 2024 are required to automatically enroll participants – see SECURE 2.0 Act for more details. The default contribution rate must be at least 3%, but not more than 10%, plus an automatic contribution increase of 1% per year up to a maximum of at least 10%, non-safe harbor plan, but not more than 15% if plan is safe-harbor.

Participants can change this amount or opt out by choosing the opt-out option in their online account under “Manage Deferrals.” With the automatic enrollment feature, it can help increase participation, simplify administration, and help employees save for retirement.

What happens if my company grows beyond 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, Ubiquity 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 vested 401(k) account balance. 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 what they may owe for the applicable year 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 pre-tax contributions you make, and you can take advantage of any matching contributions that are offered by the company. You may contribute up to the maximum per IRS limits for the applicable tax year. Note: You’ll 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 for bundled plans.

• $145 per month recordkeeping fee ($435 billed quarterly) if working with a third party administrator (TPA) or $185 per month bundled recordkeeping fee ($555 billed quarterly) if not working with a TPA.

The participant pays:

• $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 and/or TPA fees, if you choose to work with one. If the financial professional or TPA bills you (the business owner) directly, you will pay this fee. If the financial professional or TPA 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.

• Custodial and investment fees, which are charged against participating employees' accounts and vary by investment.

How do contributions work?

Contributions are forwarded by the plan sponsor (you) for 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 each pay period.

• If offered, business owners can match 100% up to 10% of eligible pay participants contribute 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’ll 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 recordkeeping fee ($145/month for a total of $435 if working with a TPA, or $185/month for a total of $555 if not working with a TPA), and if electing to pay for participants, three months of the $6/month per participant fee ($6 x number of participants x 3 months). If applicable, financial professional and TPA fees can be deducted quarterly from participant accounts.

Specific deadlines apply to safe harbor plans, and this may impact billing and subscription effective dates.

Plan features

What makes Simply Retirement by Principal^® a different kind of solution?

Simply Retirement by Principal^® is the first 100% digital 401(k) plan through Principal^®. Here are a few key features that set it apart:

• It's designed for small businesses with fewer than 100 employees.
• It's all online. From designing and purchasing your plan to e-signing documents to onboarding employees and ongoing plan administration, everything can be done on a website—where and when it's convenient for you, as well as your financial professional and/or TPA—if you are working with one. If needed, support is also provided through email and phone.
• It has cost-efficient, flat-fee pricing. Simply Retirement by Principal^® is the same price for all customers, period. And that price doesn't change as your plan assets change.
• It's created for simplicity. Streamlined selections and investment choices give you options without overcomplicating the process.

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 account from their dashboard once they set up their online account. If you're working with a TPA, your plan provisions for auto enrollment and Roth contributions may vary.

What’s the vesting schedule for this plan?

Business owners can choose to have their employees 100% vested in the 401(k) plan immediately or on a 6-year graded vesting schedule. However, if you're working with a TPA, your plan's vesting options may vary.

Are loans available with this plan?

Yes. Participants can request to take one loan from their 401(k) plan account 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. If you're working with a TPA, your plan may vary.

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. Ubiquity's Payroll (k)oncierge service can help you get started.

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. If you're working with a financial professional, they may assist you with selecting an alternative investment option lineup for your plan. Talk to your financial professional for more information.