Help Center

What is compliance testing?

Betterment Editors — Fri, 09 Dec 2022 16:51:48 GMT

401(k) plans offer tax benefits to both employees and employers. To ensure the plan is being offered and utilized in a non-discriminatory manner, compliance testing is required annually.

Our plan was created this year. Why do you need last year’s census information?

Betterment Editors — Fri, 09 Dec 2022 16:50:13 GMT

We need last year’s census information because Highly Compensated Employees (HCEs) are calculated on a lookback year. In other words, in order to prepare your compliance testing for the year in question, we need to calculate who the HCEs are based on the prior year’s compensation. This is not an optional request.

Why do you need this information? Can you use what we provided last year?

Betterment Editors — Fri, 09 Dec 2022 16:49:01 GMT

The information we request during compliance testing is used to prepare an annual Form 5500 on your company’s behalf. Similar to other tax forms, the information detailed on this form must accurately reflect the plan’s state over the course of the plan year. Things do change. For example, HCEs and owners may vary from one year to the next. For this reason, we ask that you provide this information annually.

How can we avoid HCE refunds next year?

Betterment Editors — Fri, 09 Dec 2022 16:48:02 GMT

If your company would like to avoid refunds for Highly Compensated Employees (HCEs), there are several potential resolutions to consider:

When can we expect Compliance testing results?

Betterment Editors — Fri, 09 Dec 2022 16:46:34 GMT

The availability of your testing results will vary depending on your plan type.

What should we do with our Compliance package?

Betterment Editors — Fri, 09 Dec 2022 16:45:26 GMT

Your compliance package is provided for audit purposes and should be saved to your company’s records. The package does not need to be distributed to employees. Participants should only be notified if the plan fails testing, and there is an impact on their personal accounts. We will let you know if that is the case.

Why does the Betterment pre-filled census not match with our census records?

Betterment Editors — Fri, 09 Dec 2022 16:41:10 GMT

Mismatched census records typically indicate that your plan converted to Betterment mid-year. If you converted mid-year, please be sure to upload the full year’s worth of census information. If you did not convert plans mid-year, the mismatch could be the result of Betterment receiving incomplete payroll records or inconsistent payroll records from earlier in the year, where the records we received did not match the actual payroll information. It certainly happens, but what matters most is that we use the correct information for compliance testing purposes. We will use the records you upload now to make any corrections that are required.

Why won’t the census file upload?

Betterment Editors — Fri, 09 Dec 2022 16:39:46 GMT

CSV files can have tricky formatting requirements. We have listed out some troubleshooting tips below:

Where can I find my Fidelity Bond information?

Betterment Editors — Fri, 09 Dec 2022 16:35:17 GMT

During the onboarding of your plan, you may have acquired a Fidelity Bond through an insurance provider. Alternatively, you may have had an existing Fidelity Bond if you transferred from a different provider to Betterment at Work. Betterment does not offer Fidelity Bonds, nor do we manage them on your behalf. For more information or assistance with your Fidelity Bond, you will need to contact your provider directly.

Are corrective contributions or distributions required?

Betterment Editors — Fri, 09 Dec 2022 16:32:38 GMT

Yes, any corrective contributions or distributions are required to make sure your plan is compliant.