Timing of Deposits 401(k)/403(b) Deferrals and Loan Repayments

Timing of Deposits 401(k)/403(b) Deferrals and Loan Repayments

One of the questions asked by your TPA during the annual census collection may be whether your participant contributions and loan payments were transmitted within the Department of Labor (DOL) safe harbor time frame.It’s an important question because both the DOL and the Internal Revenue Service (IRS) are interested in seeing employee contributions deposited timely. When contributions are not deposited timely, an operational failure occurs, which could lead to plan disqualification. Howeve...
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New Information on Participant Statements: Lifetime Income Illustrations

New Information on Participant Statements: Lifetime Income Illustrations

If you sponsor a defined contribution retirement plan, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 now requires additional information be provided to your plan participants on their quarterly account statements. Along with their current account balance, two lifetime income illustrations must now be included once a year. This is intended to help your plan participants understand their current account balance in terms of what it means for them at retirement so th...
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Navigating the Labyrinth of Required Minimum Distributions

Navigating the Labyrinth of Required Minimum Distributions

Since the passage of the Tax Reform Act of 1986, taxpayers have been required to withdraw previously untaxed dollars from their qualified plan and IRA accounts. These withdrawals are called Required Minimum Distributions or RMDs. Historically, those at and over the age of 70 ½ must take annual withdrawals from their tax deferred accounts including IRAs, SEP IRAs and 401(k) plans. An RMD is calculated by dividing the previous year’s balance by a life expectancy factor issued by ...
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SECURE Act Provisions for Long-Term Part-Time Employees

SECURE Act Provisions for Long-Term Part-Time Employees

Historically, 401(k) plans could exclude individuals who worked less than 1,000 hours in the plan year. However, in its effort to expand access to employer retirement plans, the Setting Every Community Up for Retirement Enhancement (SECURE) Act introduced the concept of a “long-term, part-time employee” (LTPT). The Act requires that starting in 2024, 401(k) plans permit LTPTs the opportunity to elect to make salary deferrals to a 401(k) plan.So, why talk about it now if not effe...
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2022 – An Ideal Time to Review Plan Design

2022 – An Ideal Time to Review Plan Design

Each year, those in the retirement community collect, analyze and calculate data to ensure plan compliance with the laws that govern qualified retirement plans. The calendar of deadlines repeats each year, challenging plan sponsors and service providers to focus on the current plan compliance along with the myriad of changes that have come into effect in the last few years. In addition, the COVID-19 pandemic created many financial difficulties and workplace changes for millions of employees...
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Form 5500 Filing Extension for FEMA Designated Disaster Areas

Form 5500 Filing Extension for FEMA Designated Disaster Areas

On August 31st, 2021, the IRS issued guidance extending tax filing deadlines for Form 5500 in areas designated by the Federal Emergency Management Agency (FEMA) as qualifying for assistance due to Hurricane Ida and other recent natural disasters. This extension applies not only to Form 5500 filings but also to Form 8955-SSA.The list of FEMA-designated disaster areas due to Hurricane Ida and other natural disasters continues to grow. Plan Sponsors are eligible for this relief if their p...
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Participant Distribution Fraud in the “New Normal”

Participant Distribution Fraud in the “New Normal”

The Coronavirus pandemic, without a doubt, has changed the way we do business. It has also created some unanticipated vulnerabilities. For instance, since the start of the “new normal,” there has been an increase of cyberattacks on retirement plans and participant accounts through unauthorized distributions. How did this happen? In March of 2020, Congress passed the CARES Act legislation that increased access to retirement funds for those affected by the COVID-19 pandemic. At th...
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Save More for Retirement in 2022

Save More for Retirement in 2022

On November 4, 2021, the IRS announced the Cost of Living Adjustments affecting the dollar limitations for retirement plans for 2022. In October, the Social Security Administration announced a benefit increase of 5.9%, the largest increase in nearly 40 years. Following suit, many retirement plan limits have increased as well over the 2021 levels. Contribution and benefit increases are intended to allow participant contributions and benefits to keep up with the “cost of living” f...
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Looking to Maximize Savings? Cash Balance Could Be the Answer!

Looking to Maximize Savings? Cash Balance Could Be the Answer!

So, you established a 401(k) plan for your company and have been contributing consistently for years. The plan has likely afforded your company significant tax savings and has allowed you to attract and retain quality employees. While a 401(k) plan is a great savings vehicle, did you know there is a type of qualified retirement plan that will allow you to contribute significantly more than the maximum allowed in a stand-alone 401(k) profit sharing plan?We are all familiar with defined contr...
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Safe Harbor: A Cure For Your Testing Headaches

Safe Harbor: A Cure For Your Testing Headaches

A crucial requirement for 401(k) plans is that the plan must be designed so it does not unfairly favor highly compensated employees (HCEs) or key employees (such as owners) over non-highly compensated employees (NHCEs). To satisfy this requirement, the IRS requires that plans pass certain nondiscrimination tests each plan year. These tests analyze the rate at which HCE and key employees benefit from the plan in comparison to NHCEs. Failed tests can result in costly corrections, such as refu...
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