If I start my business during the year, can I set up my plan immediately?
Yes. You can start contributing immediately. The Uni-K Plan must be established no later than the last day of the business's tax year.
Can I change to a Uni-K Plan if I already sponsor a plan for my business?
Yes. Uni-K can accept transfers or rollovers from your current plan, but the steps you need to take depend on the type of plan you own and whether you have funded it for the current tax year. Generally, profit sharing plan owners can amend their plans into a Uni-K while money purchase plan owners must terminate their plans first. SIMPLE IRA owners who have made contributions for the current year cannot start up a Uni-K until the following year. And SEP owners may be able to establish a Uni-K for the current year, depending on the type of SEP you have adopted. Check with your advisor or call Pioneer for more information.
If I own multiple businesses, is the Uni-K Plan right for me?
Maybe. If you have ownership in more than one business and the businesses are considered to be under common control as defined by the IRS, then your businesses are viewed as a single entity for retirement plan purposes. This means that you must include all employees when setting up a plan and the Uni-K Plan is designed for owner-only businesses. Consult your tax advisor to determine if the Uni-K Plan is appropriate for your situation.
Do I need to include part-time employees in the plan?
You may exclude any employee who works fewer than 1,000 hours per year.
Do I have to make contributions into the plan each year?
No. You have the flexibility to decide from year to year how much to contribute -- up to the legal limits.
Can I contribute to a Uni-K Plan for my sideline business if I participate in another employer-sponsored plan?
You can contribute to a Uni-K Plan. However, if you make salary deferral contributions to another employer's plan, you must count those amounts along with any deferrals made to your Uni-K when determining the maximum deferrals that may be contributed for the year. This aggregation is not necessary for employer contributions.
Can the employer contribution vary by participant?
No. Each owner and spouse must receive the same percentage-of-pay contribution. So if you give yourself a 25%-of-pay employer contribution, all participants must receive a 25%-of-pay contribution. This rule does not apply to salary deferral contributions. Each participant may choose how much to defer.
You may elect to have your salary deferral contributions be made on either a pre-tax or Roth basis. Use the Uni-K Remittance Form to indicate the nature of your contribution. Contact your advisor for more information.
What is the difference between an employer contribution and a salary deferral contribution?
If your business is incorporated, the employer contribution is based on your W-2 income and is contributed by the business. The maximum employer contribution is 25% of pay. It is not subject to federal income tax or Social Security (FICA) taxes. The salary deferral contributions are withheld from your pay and are excluded from federal income tax but are subject to FICA. The maximum salary deferral amount for 2015 is 100% of pay up to $18,000 or $24,000 if you are age 50 or older.
If your business is unincorporated, the employer and salary deferral contributions are based on your net earned income. For help in determining your maximum contribution amount, refer to the Self-Employed Contribution Guide in the Uni-K Set-Up Kit. Contributions are not subject to federal income tax but are subject to self-employment taxes (SECA). You receive a tax deduction for both salary deferral and employer contributions on your Form 1040.
When must contributions be made in order to take a deduction for a given year?
Employer contributions must be made by the business's tax filing deadline plus extensions. Generally, salary deferrals should be deposited as soon as administratively feasible, but no later than the 15th business day following the month in which they are withheld from pay or business income.
What are my administrative responsibilities?
Since your plan covers only owners and spouses, your administrative requirements are minimal. In addition to remitting contributions to the plan, the IRS requires an annual filing of the Form 5500. Generally, no filing is required for the plan year until the plan assets exceed $250,000 (and seven months after you terminate the plan, regardless of plan size). Pioneer offers an optional low cost service to provide you with a signature-ready form. If you prefer to prepare the 5500 yourself, ask for Pioneer's annual package of 5500-EZ filing instructions.
What happens if my business grows and I hire employees?
The Uni-K Plan is designed for business owners and their spouses. Contributions are 100% vested immediately and if you give yourself the maximum employer contribution, you are required to contribute the maximum for your employees. Also, a number of additional IRS requirements must be met if your plan includes employees. If you currently have employees or anticipate adding employees soon, work with your financial advisor to select a plan that meets your overall business requirements. Pioneer offers a broad array of retirement plans designed for businesses with employees, including age-based plans and bundled 401(k) plans for any size business.
Before investing, consider the productís investment objectives, risks, charges and expenses. Contact your advisor or Pioneer Investments for a prospectus or summary prospectus containing this information. Read it carefully.