A §401(h) sleeve is mechanically simple but operationally exacting. Use this 12-item checklist to confirm the design is correct before the first contribution leaves the bank.
Document and structure
- Plan document amended to include §401(h) provision
- Sub-account established with separate accounting in the trust
- Investment policy statement updated to cover §401(h) assets
- TPA confirms ability to track §401(h) sub-account on the recordkeeping system
Contribution and testing
- Annual §401(h) contribution sized at 18–22% of combined contribution
- Cumulative subordination ratio modeled across the plan's projected life
- Coverage and nondiscrimination testing extended to the §401(h)
- Reasonable-compensation check (for S-corp/PC owners)
Operational
- Form 5500 schedule updated to include §401(h) line items
- Retiree-medical reimbursement process documented for participants
- Distribution authorization forms drafted
- Coordination with payroll and benefits team confirmed
Educational only. This page is for general education on §401(h) accounts and qualified retirement plan design. It is not individualized investment, tax, or legal advice. Consult a qualified fiduciary advisor, enrolled actuary, and ERISA counsel before adopting a §401(h) sub-account.