Frequently Asked Questions
Below is a list of Frequently Asked Questions about Launch401k.
1. What are the basic requirements to qualify?
Launch401k is built for small businesses wanting an efficient, low-cost retirement solution. Below are requirements to qualify:
- Plan Size – Up to 250 eligible employees.
- Plan Design – Must be willing to utilize the plan design and plan features offered in Appendix A.
- Payroll – The company must use a payroll provider with integration to JULY or be willing to submit comprehensive payroll.
- ACH – Fund contributions via ACH pull.
- Online Setup – Complete online setup forms and e-sign service agreements.
- Online Features – Utilize and promote online plan features such as online enrollment, distributions, and loans.
- No Outside Assets – All assets must be held in investments approved by the plan’s 3(38) fiduciary. Investments not approved by the fiduciary do not qualify for Launch401k. Non-approved investments include: brokerage accounts, employer stock and annuities.
- Takeover Plans – Certain takeover plans with protected and complex features are not allowed. This includes plans with joint and survivor annuity provisions and assets that cannot be converted to the investment options approved in Launch401k.
- Single Payroll Contact – Must have a single payroll contact responsible for payroll communication.
- Controlled Groups – Companies with employees that are part of a Controlled Group or Affiliated Service Group must adopt the plan.
2. Can we choose investment options other than those shown in the proposal?
No. Launch401k is intended for plans wanting a built-in 3(38) investment fiduciary, and the employer must use the investment lineup shown in the proposal.
3. Can owners and highly-compensated employees (HCEs) maximize contributions?
Launch401k includes an advanced plan design option that meets IRS safe harbor requirements and allows owners and highly-compensated employees to fund the maximum contribution. Depending on plan participation, contributions of owners and HCEs may be limited. For more information, please contact a member of the JULY Sales Team.
4. Can employees defer both Roth and pre-tax deferrals and what is the difference?
Yes. Pre-tax deferrals are contributed before income taxes, saving employees 10%-37%. Pre- tax contributions grow tax free, and employees pay no income tax until amounts are withdrawn. With Roth deferrals, employees pay income taxes today, but at retirement, when funds are withdrawn, no income tax is assessed on original contributions or on earnings.
5. What if my advisor wishes to serve as 3(21) or 3(38) investment fiduciary?
Launch401k includes Expand Financial as the 3(38) investment fiduciary. While the plan’s investment advisor may also serve as a 3(21) fiduciary, the advisor cannot serve as a 3(38) fiduciary. JULY has other products for advisors seeking this option.
6. Can fees be paid by the company instead of the plan?
Participant-based and minimum fees must be paid by the employer until plan assets reach $200,000. Once assets exceed $200,000, the employer may elect to have these fees paid from plan assets.
7. Does JULY receive revenue sharing from the investments under the plan?
In the event a fund is chosen by the 3(38) investment fiduciary that includes revenue sharing, JULY will allocate those revenues back to plan participants.
8. Since JULY is the 3(16) Administrator, is the employer relieved of all fiduciary duties?
No. JULY is appointed as a named fiduciary for most administrative duties which reduces fiduciary liability for these functions; however, the plan sponsor still has fiduciary responsibility for certain functions, including monitoring JULY, Expand Financial, and the plan’s investment advisor.
9. How are participants enrolled and what materials are provided?
Participants enroll using our online participant enrollment system. We can also provide PDF copies of enrollment materials that can be printed and shared with participants.
10. What if my Launch401k plan is audited?
A key benefit to offering a PEP is that you are fully covered in the event of a plan audit, potentially saving you high audit costs. Launch401k undergoes its own plan-wide audit, covering participating plan sponsors that require a plan audit.
11. What type of audit does JULY receive on its business processes?
JULY undergoes an annual SOC 1 type 2 audit of recordkeeping controls by an Independent CPA Firm. We are one of only 16 firms nationwide to hold a Recordkeeping Services Certification from the Centre for Fiduciary Excellence – CEFEX (www.cefex.org).