What to do with 401k forfeitures

Most 401k plans include either employer match contributions or employer profit sharing contributions. These types of contributions may have a vesting schedule attached to them which is determined by the employer. A vesting schedule dictates how much of the employer contributions are owned by an employee based on their time with the company. This means …

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How to avoid common 401(k) plan administrative issues

401(k) plans are highly regulated and have many rules as found in the Employee Retirement Income Security Act (ERISA).  It can be difficult to keep your plan in line with ERISA regulations, but the following suggestions can help. Don’t miss: Defining compensation within a 401(k) plan ERISA requires that a 401(k) plan must operate according …

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Defining compensation within a 401(k) plan

A common mistake found in retirement plan audits is the incorrect usage of the plan’s definition of compensation. This can quickly lead to participants contributing too much or too little into their accounts. Mistakes should be corrected as soon as they are identified. This involves identifying (1) the pay codes that should or should not …

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What to expect to be asked for in an employee benefit audit

If your company sponsors an employee benefit plan with 100 or more participants, an audit may be required (for more on when an audit is needed read the Henry+Horne blog Does your employee benefit plan need an audit). After it is determined that an audit is necessary and the audit is soon to begin, you …

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Impact of employee reduction on employee benefit plans

In the wake of the COVID-19 pandemic and the resulting economic uncertainty, employers are faced with decisions that could have significant impacts on their 401k retirement plans. A serious decision that employers face is a potential employee reduction. It is important to consider the impact this decision can have on the retirement plan. A reduction …

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Important information when changing plan administrators

From time-to-time employers deem it necessary to change administrators for their employee benefit plan. This may affect the election choices of the employees. A Third-Party Administrator (TPA) is hired by an employer to deal with the behind the scenes events that occur while handling the retirement plan. They assist with the plan design and are …

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What employers need to know about 401(k) compensation

When administering their 401(k) plan, one of the most common mistakes that employers make is allocating plan contributions to a participant account using the incorrect employee compensation. The most common occurrence is when an employer mistakenly excludes forms of compensation such as bonuses, overtime, or commissions that are defined as eligible compensation in the company’s …

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Plan terminations and partial plan terminations

Many plan participants may be surprised to learn that their employer can discontinue their 401k plan at their own discretion. The IRS considers a plan terminated once an official date of termination is established by the sponsor, the benefits and liabilities under the plan are determined, and all assets are distributed as soon as administratively …

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Form 5500: What you need to know

Form 5500 is an annual return/report that employee benefit plans are required to file with the Department of Labor’s (DOL) Employee Benefit Security Administration (EBSA) division. Employee benefit plans subject to Employee Retirement Income Security’s Act (ERISA) standards are required to file Form 5500 on an annual basis. This report serves to satisfy necessary disclosures, …

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