MDB 401(k)

What are the three main advantages MDB401k has over other 401k plans?

What are the two main differences between MDB401k and other 401k plans?

What is a "401k prototype plan"? What does it mean that MDB401k includes one?

We already have a 401k plan, but it's a headache, and costs a fortune. Can we switch to MDB401k?

Can we hire you to set up and run our 401k? What's the cost?

We've never sponsored a 401k plan before. Will someone help us with deciding the particulars?

What if we start with a run-it-yourself plan, then later decide we want an outside-serviced plan?

Can MDB401k handle 401k matching contributions? How about profit-sharing contributions? Are either mandatory? Do we have control over rates and vesting schedules?

Does MDB401k let us exclude part-time workers from receiving 401k matching contributions?

Can MDB401k handle 401k loans? Are they mandatory? Do 401k loans increase the price of MDB401k?

Can MDB401k handle 401k hardship withdrawals? Are they mandatory?

What kind of investments are available with MDB401k? Can we offer 401k participant-directed brokerage accounts? Our company's listed stock?

Do we repurchase MDB401k every year? Does that get expensive?

Why do we pay for "eligible employees," not just those who participate in the plan?

How does MDB401k help keep our 401k in synch with IRS regulations?

Does MDB401k help with 401k compliance testing?

401k year-end tax reporting?

What other reports does MDB401k -- and do these reports save us time?

What are the three main advantages MDB401k has over other 401k plans?

1. It's Easy to Use

With MDB401k, most small businesses can run their 401k plans in less than 15 minutes a month. You simply feed some basic payroll information -- the same data most off-site, third-party vendors would make you collect anyway -- and click "Process." In seconds you're ready to forward the month's contributions to Mydiscountbroker.com for investment, then have the software print account statements for plan participants, run compliance tests on your plan, or prepare any of a myriad of useful reports for your records.

2. It Keeps Your 401k Assets Secure

With MDB401k you have direct, constant control and oversight over your employees' 401k contributions -- from the time the money is separated from their taxable payroll until it's safely and securely deposited with their Mydiscountbroker.com self-directed discount brokerage accounts. The press has reported on the diversion of plan assets by unscrupulous employers and unscrupulous third-party "middleman" administrators. MDB401k helps protect employees' assets because all transactions occur directly between the employer and the investment company housing the plan's assets, circumventing the third-party "middleman."

As an additional safety measure, each plan participant receives a monthly individual account statement sent directly from the investment company housing his or her personal 401k savings. These individual, monthly account statements confirm and document every transaction, making it virtually impossible for malfeasance to go undetected.

3. It's Extremely Affordable

MDB401k saves clients, on average, 60% to 80% a year off traditional 401k expenses.

-- With pricing that starts at just $495 a year for plans serving one to four employees and that increases ONLY with plan size (all options, Mydiscountbroker.com self-directed discount brokerage account investments, tech support and more included), MDB401k pricing is hard to beat.

-- Visit our Pricing and Price Comparisons page to see how affordable a MDB401k plan can be for your company.

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What are the two main differences between MDB401k and other 401k plans?

1. Cost is the primary difference -- It could well be the mitigating factor in whether or not your company can sponsor a 401k.

-- No competing plan is priced as economically as MDB401k.

-- Virtually all other plans charge extra for 401k loans, hardship withdrawals, automatic enrollment, an extensive investment list, etc.

2. Investment choice is another major source of variation:

-- MDB401k lets you offer individual, Mydiscountbroker.com self-directed discount brokerage accounts to your plan participants.
-- Mydiscountbroker.com self-directed discount brokerage accounts mean each plan participant has access to his or her choice of investments. Stocks, options, foreign securities, mutual funds, bonds, corporate, municipal and zero coupons, certificates of deposit, government obligations, and UIT's are all available.

-- Most other plans offer far less selection; some limit you to no choice -- they preselect the investments, usually their own, and often charge significant fees for additional, nonproprietary investments.

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What is a "401k prototype plan"? What does it mean that MDB401k includes one?

The prototype plan is the master document describing and defining every aspect of a 401k prototype. The IRS analyzes this master and deems it "approved" or "disapproved." Once approved, the master can be used to create any number of 401k plans that fall within the approved specifications.

-- Included in the prototype plan can be a certain amount of plan flexibility, such as a variety of possible participation eligibility requirements.

-- With MDB401k, you have IRS-approved flexibility with your plan's participation eligibility parameters, with whether or not to offer employer contributions and if so what type (matching, profit-sharing, and/or qualified nonelective) and at what rate, with whether you want to offer 401k loans, and more. See our Plan Customization Options page or our 401k Order Form for a complete list of options currently available to MDB401k clients.

-- Ongoing plan qualification depends on, among other things, on your plan passing its annual IRS compliance tests (unless you've chosen to run your plan via the IRS-approved safe harbor method of plan administration).

-- MDB401k includes both point-and-click compliance testing with results in seconds (so you can run the tests after you finish each month's processing to see long before the official year-end tests if any undesirable trends are surfacing) and safe harbor software automation functions.

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We already have a 401k plan, but it's a headache and costs a fortune. Can we switch?

Yes. Our streamlined conversion process makes plan takeovers easy and efficient.

-- The typical 401k plan can be converted into a MDB401k plan in a matter of days!
-- We set up everything for you, just as we would for a new plan.

-- The conversion process is FREE. You pay nothing more than any other MDB401k client.

-- You can likely keep your existing investments (they're likely available through Mydiscountbroker.com self-directed discount brokerage accounts), and you can expand your listing to the entire lineup of Mydiscountbroker.com 401k investments.

-- Complete our Plan Conversion Order Form or contact us for more information or to have us get started on transforming your 401k plan into an affordable, flexible, option-rich MDB401k plan.

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Can we hire you to set up and run our 401k? What is the cost?

We do not offer full service 401k plans, but we can likely recommend a relatively affordable, reliable provider once we know your 401k needs. Please contact us if you're looking for a full-service, reliable, small business plan provider.

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We've never sponsored a 401k plan before. Will someone help us with the particulars?

In establishing your MDB401k, we'll explain all the 401k basics to you as well as the plan customization options available to you and how each typically affects the operation and popularity of a plan of your size.

Once you choose the features you want for your company plan, we hardwire your decisions into your MDB401k software. The software then "knows" your plan and handles most of your run-it-yourself plan administration for you.

-- Your MDB401k User's Guide offers two levels of help: The Quick Guide tells you the short and simple of what to do to get your plan up and running and continued running; the Supplement gives background details on 401k plan operation and less frequent transactions.

-- There's free technical support, should you ever need it.

Our technical support staff fields inquiries on technical, software-related questions as well as general 401k and related questions. We are not, however, pension law attorneys, accountants, actuaries or tax preparers, who are the only qualified people to answer certain questions. It is always advisable to consult with your tax and/or legal advisors in matters that concern your company's 401k plan.

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What if we start with a run-it-yourself plan, then later decide we want an outside-serviced plan?

If, for any reason, you decide you no longer want to run your own 401k plan, we can quickly convert your MDB401k into a 401k serviced by an outside company -- we can even recommend a quality provider who specializes in 401k plans of your size.

So if your company grows by leaps and bounds and you decide you would rather pay someone else to do the work, we can help. Just let us know!

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Can MDB401k handle 401k matching contributions? How about profit-sharing contributions? Are either mandatory? Do we have control over rates and vesting schedules?

MDB401k allows for the most popular 401k options permitted under current law, but does not mandate inclusion of any. Employer matching contributions, profit-sharing contributions as well as qualified nonelective contributions are included in these options.

-- With MDB401k you decide whether to offer (or exclude) employer contributions.

-- If you decide to include employer contributions, you choose the type (matching, profit-sharing and/or qualified nonelective) and define the rate(s). Most any rate allowed by 401k regulations is permissible with MDB401k.

-- If you decide to include employer contributions, you define the vesting schedule. You can choose a different schedule for any matching and profit-sharing contributions. Qualified nonelective contributions are, by law, always 100% immediately vested when made.

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Does MDB401k let us exclude part-time workers from receiving 401k employer contributions?

To exclude part-timers from receiving employer contributions, simply exclude them from participation in the plan by setting appropriate length of service and other participation requirements for your plan.

-- If you want part-timers to be able to participate in your 401k plan but not receive employer contributions, you're better off not offering employer contributions but instead offering some type of bonus to the groups of employees you seek to reward. 401k contributions are a percentage of pay, including bonuses, so paying bonuses will allow employees to contribute more to their 401k accounts themselves (in lieu of your making contributions for them). Please contact us or consult your tax advisor for details and further options.

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Can MDB401k handle 401k loans? Are they mandatory? Do 401k loans increase the price of MDB401k?

MDB401k allows for all the most popular 401k options permitted under current law, but does not mandate inclusion of any. 401k loans are one of these options. Your company sets the policy for its plan within the IRS guidelines.

There is no extra charge for including 401k loan capabilities in your MDB401k system.

-- Your company can charge plan participants a "reasonable" (in the IRS' eyes) fee for processing 401k loans; $25 to $50 is most common.

NOTE: Non-owner employees are always eligible for 401k loans if the business owner(s) authorize loans in the company's plan. Persons who are sole proprietors, or own 5% (or more) of an S-Corporation, LLC, or partnership may not be eligible for 401k loans, but shareholders of C-Corporations are eligible. We suggest consulting with a qualified advisor for guidance if you are a business owner and intend taking out a 401k loan.

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Can MDB401k handle 401k hardship withdrawals? Are they mandatory?

The Internal Revenue Code says hardship withdrawals must be an option available to participants of every 401k plan. Thus, they are mandatory.

-- Your company can charge its plan participants a "reasonable" (in the IRS' eyes) fee for processing hardship withdrawals; $25 to $50 is most common.

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What kind of investments are available with MDB401k? Can we offer 401k self-directed brokerage accounts?

MDB401k clients have the complete lineup of Mydiscountbroker.com 401k investments available to them through individual participant self-directed discount brokerage accounts. Investment types include:

-- Stocks (all major exchanges and OTC markets)

-- Options (covered calls)

-- Foreign Securities (both listed and OTC)

-- Mutual Funds (load and no load)

-- Bonds (corporate, municipal, and zero coupon)

-- Certificates of Deposit, Government Obligations, UIT's

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Do we repurchase MDB401k every year? Doesn't that get expensive?

The MDB401k software is, like tax return software, specific to the year for which it was written. It's automated functions take into account numerous regulatory parameters that have been written into the program so you never have to worry about them.

-- Your MDB401k software processes information pertaining only to the tax year for which it was written.

-- The fee you pay for your revised, customized MDB401k run-it-yourself 401k software each year is, on average, 60% to 80% less than what you'd pay anyone to run your 401k plan for you.

-- Data transfer is handled automatically in just seconds during installation of the new year's program.

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Why do we pay for "eligible employees," not just those who participate in the plan?

Plan testing requirements set by lawmakers are written in terms of eligible employees, not just participating employees; your MDB401k program, therefore, is customized to account for all eligible (not just participating) employees.

The government's goal in creating the 401k plan is to encourage people to save money for their retirement. Lawmakers want all types of employees to make use of the 401k -- especially those categories of wage earners who historically rely heavily on Social Security for their retirement income. Employers are permitted to restrict eligibility to participate in company 401ks somewhat, but government rules have been written to encourage participation among lower-paid and mid-level employees; those who historically rely more heavily on Social Security and other government assistance during retirement.

There are numerous ways to encourage widespread participation in your company 401k plan. The MDB401k User's Guide contains many suggestions, or you can contact us for ideas before you even have us create your plan.

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How does MDB401k help us keep our 401k in synch with IRS regulations?

We've built several safeguards into the MDB401k run-it-yourself 401k system to help you keep your 401k in line with ever-changing IRS regulations:

-- We program relevant IRS regulations about contribution limits and compliance testing, among other things, into your MDB401k software. For instance, the software won't let you enter a contribution for a participant that will push the participant's year-to-date contribution total over the allowable maximum (and it tells you how much, if anything, the participant CAN contribute without exceeding the maximum).

-- MDB401k runs the all-important ADP (average deferral percentage), ACP (actual contribution percentage), multiple-use and top-heavy compliance tests that every 401k plan must pass at year's end. Although your plan only has to pass these tests at the end of the plan year, MDB401k can run year-to-date tests as often as you like (we recommend monthly) so you can spot noncompliance trends -- long before mandatory year-end testing is done -- and running those tests is as easy as a mouse click! Consider MDB401k as your in-house 401k compliance Early Warning Radar!

-- MDB401k allows you to run your 401k plan using the safe harbor method of plan administration instead of using 401k compliance testing, if you prefer.

-- MDB401k will only accept data that pertains to the calendar year for which it was written, so you'll never process data under the wrong year's regulations.

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Does MDB401k help with IRS 401k compliance testing?

Yes -- and you can run year-to-date tests as often as you want to identify any trends toward noncompliance, so you can fix the problem before the final year-end tests.

-- MDB401k runs the all-important ADP (average deferral percentage), CAP (actual contribution percentage), multiple-use and top-heavy compliance tests that every 401k plan must pass at year's end. Although your plan only has to pass these tests at the end of every plan year, MDB401k can run year-to-date tests as often as you like (we recommend monthly) so you can spot noncompliance trends -- long before mandatory year-end testing is done. Running practice compliance tests is as easy as a mouse click! Consider 401(k) Easy as your in-house 401k compliance Early Warning Radar!

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Does MDB401k help with 401k year-end tax reporting?

Included with your MDB401k system is the 401k 401k FedForms CD-ROM:

-- The 401k FedForms CD-ROM contains annotated versions of relevant 401k-related federal reporting forms (Summary Annual Report, 5500 series, 1099-Rs, and more). The annotations tell you where within MDB401k to find the requested information.

-- The MDB401k software pulls many of the numbers together for you in a brief series of easy to read reports

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What other reports does MDB401k create? How do these reports help us?

Because we're long-experienced in all aspects of 401k administration for plans of all sizes, we know plan administrators' needs and have created a series of brief, easy to read reports that enable plan administrators to find the information they need -- fast -- so they can do their jobs -- fast.

-- Whether it's purchase orders for new investment accounts that accompany the month's contributions to Mydiscountbroker.com, or account statements for plan participants or information on outstanding 401k loans, the information is available at a mouse click.

-- The MDB401k User's Guide contains an index summarizing the content of each report and typical uses for the information, so it's easy to determine which report will best suit your needs.

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