A 401k plan is determined to be top heavy if the sum of all key employee account balances exceeds 60% of the total balances in the plan as of the last day of the prior plan year. That means the determination is forward looking and affects the upcoming year. For example, if you have just …
In the administration of employee benefit plans (EBPs) occasional errors are inevitable. While proactivity, responsiveness and a robust internal control environment help to mitigate the negative effects of these errors, the U.S. Department of Labor (DOL) allows certain errors to be corrected through its Voluntary Fiduciary Correction Program (VFCP). Don’t miss: What is a 401(k) …
A 401(k) plan census report is a document that compiles employee information on all employees who were paid during the plan year. The census will often provide details on an employee’s name, date of birth, social security number, date of hire and termination, gross compensation, hours worked, employee deferrals, matches, highly compensated employees (HCEs) and …
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 …
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 …
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 …
If you have ever been curious about rollovers for an employee benefit plan, then you have come to the right place. The following provides a simple overview of rollovers. A rollover often refers to the transfer of money from one retirement plan to another without the burden of tax or penalties. Tax and or penalties …
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 …
Most 401(k) plans offer their participants a variety of investments and most of these line ups include mutual funds. The risk associated with mutual funds range from conservative to aggressive. They are comprised of pools of money collected from investors that is then invested in a variety of securities (such as stocks, bonds or cash). …
During the 401(k) plan design process, there are lots of things to consider. One of them is the eligibility requirements to participate in the plan. Who is allowed to participate in the plan? This can have a dramatic effect on the plan’s cost, ease of administration and perceived value to prospective employees. The eligibility requirements …