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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Profit sharing plans

A profit sharing plan is beneficial for an employer as it is flexible, allows for good cash flow management, and rewards employees for the company’s success. Profit sharing contributions are discretionary, and, therefore, the amount and timing of the contributions can vary year-to-year. There is no minimum or maximum contribution required by law. Accordingly, the …

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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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Fiduciary review of investments

Fiduciary responsibilities are often overlooked and underappreciated, and in-house executives and employees at your company tasked to watch over the company retirement plan may lack the qualifications to fully perform in a fiduciary role(s). That’s why when it comes to your obligations as a trustee, it’s a good idea to discuss bringing on fiduciary support …

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Safe harbor 401(k) plans – the basics

In a broad sense, the 401(k) is an investment vehicle for the masses. 401(k) plans offer millions of employees nationwide the ability to contribute directly from their paycheck into tax-advantaged investment accounts, and employers have the option to match a percentage of employee contributions (and many do). Properly utilized, the 401(k) vehicle is a stellar …

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What is a qualified non-elective contribution – QNEC

When it comes to your employee benefit plan, there are countless terms and acronyms thrown around, whether it be by HR, your third-party administrator (TPA), investment advisors or your auditors. One term you may come across is QNEC. This term is not very well-known, as many plans do not come across QNECs, but it’s important …

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Qualified domestic relations order tax consequences

Divorces can cause years of planning, saving and growth to be washed away in the blink of an eye, leaving you reevaluating the retirement that you had once planned. A qualified domestic relations order (QDRO) is a judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to …

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2019 Retirement plan limits released

The cost-of-living adjustments (COLA) for the 2018 tax year are out. These rates released by the IRS are used to adjust various tax provisions from the standard deduction and personal exemption to retirement plan limits. Here’s a comparison of the 2019 and 2018 retirement plan limits for 401(k), 403(b) and profit sharing plans: Why there are …

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Spousal consent for retirement plan changes

Many retirement plans require plan participants to obtain spousal consent prior to several events, including change of beneficiary, distributions and loans. Typically, the plans that most frequently require spousal consent for these changes are defined benefit plans, commonly known as pension plans. Defined contribution plans, such as IRAs or 401ks, may also require consent. Change …

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401(k) Pre-tax or roth contribution: which is better?

When it comes to making decisions on your 401(k) contributions, there can be a lot of different factors that make it difficult to ensure you are making the right choices. One of those choices can be deciding whether to make pre-tax contributions into a traditional 401(k) or after-tax contributions to a Roth 401(k). Pre-tax contributions …

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