Compliance Questionnaire Help Guide

Updated 2 months ago by Richard Phillips, EA, AIFA, CPC, CPFA, QPA, QKA

Was your plan covered by a fidelity bond?

Most plans on our platform are required to maintain a fidelity bond (insurance coverage) to protect against theft.  The minimum coverage amount is the greater of $1,000 or 10% of plan assets and a maximum of $500,000.  A fidelity bond is not the same as fiduciary liability insurance.  Check with your corporate insurance carrier if you’re unsure what kind of coverage you have.

Exceptions - Solo 401(k) plans (owner-only plans) and plans sponsored by churches or government entities are not required to maintain a bond.

Was there a failure to transmit to the plan any participant contributions within the time period described by the DOL?

Federal law requires employers to deposit participant contributions and loan repayments as soon as it is reasonably possible, but no later than the 15th business day of the month following the payroll check date. For example, contributions from a March 20 payroll check date have to be remitted to the plan no later than the 15th business day after March 20.

In your plan's annual filing (Form 5500 or Form 5500-SF), you are required to certify whether deposits of contributions were made on a timely basis for all payroll dates during the year.

Select "Yes" if there were any employee contributions and/or loan payments that were not remitted to the plan until after the 15th business day following the payroll check date. You must answer this compliance question as "Yes" every year until the failure is properly corrected.

Let us know if you’re unsure and we can run a report to show you the timing of when deposits were made to the plan for each payroll cycle during the year.

If there was a failure, you can easily correct this using the IRS Self Correction Program (SCP) or the Voluntary Fiduciary Correction Program (VFCP). Depending on the circumstances, excise taxes may be due and a Form 5330 may need to be filed with the IRS. Let us know if you need help with the correction process and we'll be glad to guide you through it.

Were there any nonexempt transactions with any party-in-interest?

All non-exempt transactions with a party-in-interest must be disclosed even if they are reported in your plan audit.  Expand the following section to see what is considered a non-exempt transaction.

Non-Exempt Transactions

Nonexempt transactions with a party-in-interest include any direct or indirect:

A. Sale or exchange, or lease, of any property between the plan and a party-in-interest.

B. Lending of money or other extension of credit between the plan and a party-in-interest.

C. Furnishing of goods, services, or facilities between the plan and a party-in-interest.

D. Transfer to, or use by or for the benefit of, a party-in-interest, of any income or assets of the plan.

E. Acquisition, on behalf of the plan, of any employer security or employer real property in violation of ERISA section 407(a).

F. Dealing with the assets of the plan for a fiduciary’s own interest or own account

G. Acting in a fiduciary’s individual or any other capacity in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries.

H. A receipt of any consideration for his or her 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.

Did the plan have a loss, whether or not reimbursed by the plan’s fidelity bond, that was caused by fraud or dishonesty?

In other words, was any money stolen from the plan by any plan official or company employee?


Were there any fees or commissions paid to any brokers or agents by an insurance carrier or insurance service that provides benefits under the plan?

If your plan contains any insurance products, like annuities, fees and commissions are generally paid to your broker.  Check with your plan’s financial advisor if you’re unsure about the existence of insurance products in your plan.


Has the plan failed to provide any benefit when due?

Have there been any instances where retirement benefits were unable to be paid?  For most 401(k) plans, the answer is “No”.  However, check with us if you’re unsure.


Is your organization part of a controlled group or affiliated service group?

If you are not certain as to whether your business is a member of a controlled group or affiliated service group, use the following questions to help make a determination:


Does your business (whether incorporated or not) or the principals of your business have any interest (stock, partnership interests, or beneficial interests in trust or estate) in any other business?

Does your business provide services to, or receive services from, one or more other businesses in which either your business or the principals of your business have an ownership interest?

Does your business join with such other businesses in providing services to a third person or entity?

Does your business either provide significant management services to or receive significant management services from another business?

Does your business use leased employees or shared employees with any other business?

If you answered “Yes” to any of these questions, you should contact a tax adviser familiar with your corporate structure to make a determination for you.

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