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Employers
4 min read

How Guideline simplifies multi-entity 401(k) plan compliance

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Guideline Team

Managing retirement plans across multiple related business entities can feel like trying to solve a puzzle without all the pieces. Internal Revenue Service (IRS) rules apply to a controlled or affiliated group of businesses as a single entity — but your data, reports, and testing results may live in separate silos.

These types of businesses face unique and often complex challenges when it comes to 401(k) plan compliance testing. The core issue is that the IRS treats all businesses in a controlled or affiliated service group as a single employer for plan purposes. This is to prevent business owners from creating separate entities to offer generous plans to highly compensated employees (HCEs) while excluding or limiting benefits to non-highly compensated employees (NHCEs).

That’s why Guideline created a dashboard that gives you one clear view of your entire group’s compliance. If you manage multiple 401(k) plans for your business group, this tool is for you.

"Setting up a 401(k) for five separate entities was shockingly easy."
Connie B., Controller
Rader Management Corp DBA Dunkin'
Client of Guideline. Views may not be representative of other clients

Why multi-entity plan compliance can be critical — and complicated

Being in charge of retirement plan compliance for a multi-entity organization can be complex. Whether you manage plans for multiple franchise locations, several family businesses under one umbrella, or a handful of businesses operating under the same parent company, you’re working with dozens of moving parts at any given time.

Managing plan compliance for a multi-entity organization can be a big administrative undertaking, not to mention a significant financial risk. Not only do you have to share employee and business data with the record keeper to ensure the right nondiscrimination testing is completed, you also have to stay on top of individual plan results to avoid compliance failures and issue corrections by the applicable deadline each plan year.

Even if each company sponsors its own 401(k) plan, the IRS could view your group as a single employer. All entities that are members of the Legally Related Group (LRG) must be tested together. Therefore, if some plans are set up differently or favor highly compensated employees, the LRG may fail the nondiscrimination testing and corrections will be required for all entities and participants.

Give your employees a roadmap to retirement

With Guideline, you can provide an impactful work benefit while minimizing paperwork and fees.

How Guideline simplifies multi-entity plan compliance

At Guideline, our goal is to take the hassle out of 401(k) plan management and compliance. That’s why we built a brand new dashboard for Legally Related Groups (LRGs), also known as multi-business entities, controlled groups or affiliated service groups.

Our LRG Compliance Dashboard offers real-time visibility into your group-level compliance, so you can stay ahead of problems and close out the year smoothly.

Here are four benefits of using the LRG Compliance Dashboard for your plan compliance:

1. One dashboard = seamless administration

For 401(k) plan sponsors, annual compliance testing is a critical task. The IRS requires this testing to ensure a company's plan doesn't unfairly favor owners or highly compensated employees. Guideline automates this process, helping you save time and avoid potential penalties and added costs.

With Guideline’s LRG Compliance Dashboard, you don’t have to manage multiple logins or merge together spreadsheets to keep up with your various plans. Whether you manage two plans or twenty plans, you’ll see your group’s status — and each plan’s real-time IRS testing results — in one central location.

Even better: Guideline walks you through the results, explaining everything in plain language and letting you know exactly what your next steps should be.

If your plan includes a Safe Harbor feature or is a Starter 401(k) plan, it's designed to avoid most of the required nondiscrimination tests.1 However, this dashboard is still important for managing plan limits and the company and employee information required for annual filings.

For LRGs, accurately determining which entities are being tested together can be a critical step to avoid serious, costly errors. We display this information on your dashboard so you can verify it at any time. If your business structure changes—for example, if you acquire or sell an entity—simply let us know, and we'll ensure your plan remains compliant.

2. Built-in error identification tools

It’s easy to make errors or miss potential problems (like exceeding thresholds) when you’re overseeing multiple plans. But Guideline has built-in error identification tools designed to reduce your risk and help prevent administrative issues before they become a significant problem.

Our compliance software helps proactively identify common issues such as missed contributions, and flags potential compliance failures in real time, getting ahead of nondiscrimination testing. We'll give you clear instructions about how to fix any potential problems, so you can act before penalties must be paid or corrections are required. If corrections are required, we will work with you every step of the way to ensure the correction is completed timely and follows IRS and/or Department of Labor standards for the applicable correction method.

3. Risk protection at no extra cost

Given the higher complexity, most LRGs are in our Enterprise package which helps ensure you have a dedicated relationship manager. Despite the slightly higher base fee, we only charge you as if you are one plan and waive the base fee on all other entities, no matter how many you have. In addition, there are no extra fees associated with compliance testing. Everything is included.2

4. Practical help with form filing and audit prep

Helping to confirm your 401(k) plan is compliant includes filing an annual IRS Form 5500 and, depending on your plan's size, preparing for a plan audit. We handle the preparation and filing of the IRS Form 5500 for all plans, and we'll even sign it for most of our clients where we act as the 3(16) administrative fiduciary.3 You can track the status of these tasks right from your dashboard.

If a large plan filer audit is required, we’ll let you know and connect you with an audit firm well before the IRS deadlines. For a closer look at how we simplify the audit process, check out this post.

At Guideline, we take a comprehensive approach to compliance. We not only manage all your 401(k) plans across various entities but also handle compliance tasks throughout the entire plan year. Our top priority is helping your plan meet all necessary deadlines and requirements while minimizing your effort, time, and cost. Our compliance dashboard provides full visibility into all compliance-related activities, ensuring you're always in the loop.

Ready to sign up for Guideline?

Managing multiple 401(k) plans for a single business group takes valuable time and resources — but having the right tools can help save you both.

"Guideline gives me the guidance I need so I don’t have to moonlight as a 401(k) expert."
Cody R., Owner & Founder
IZT Tech
Client of Guideline. Views may not be representative of other clients

That’s where Guideline comes in. Our LRG Compliance Dashboard lets you view every plan’s compliance status and testing results in one place, helping to give you more control over your plan management and avoiding costly compliance failures.

If you manage more than one plan for an LRG, learn more about your Guideline options or get started today.2

This content is for informational purposes only and is not intended to be taken as tax advice. Please contact a tax professional for further information.

Give your employees a roadmap to retirement

With Guideline, you can provide an impactful work benefit while minimizing paperwork and fees.


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