If you contributed to your 401k plan, then received a refund for a portion of your contributions for that year, chances are your plan failed the annual IRS required compliance (discrimination) testing. This test, or series of tests (based on your plan’s elections), provide for equal tax breaks to all participating employees – not just …
All 401(k) Plans have a plan document which contains a comprehensive detail of all the rules surrounding the Plan. This plan document can be lengthy and overwhelming and therefore, 401(k) Plans also have a Summary Plan Description (“SPD”) document. The SPD is a concise summary of the Plan’s key features, some of which include the …
It is essential to save a portion of the money you make to be able to retire at a reasonable age and have the time and money to carry out lifelong aspirations. You hear all the time to contribute to a 401(k) plan, but why are there contribution limits at only $18,000 a year? Plainly …
Forfeitures occur in an employee benefit plan when participants are terminated from employment, but are not fully vested in the employer’s contribution to their accounts. This can be best illustrated through an example: An employer offers a profit sharing contribution for employees participating in its 401(k) plan. The plan document states that an employee must …
Like most people who work in the accounting field, I am a stickler when it comes to spending. I am also a strong believer in the concept of living below your means and that saving early for retirement can go a long way. But I know that everyone is not like me. When I saw …
Whether you’re currently enrolled in a 401(k) plan, or about to enroll in a 401(k) plan, consider the following: The do’s Do participate if there is an employer match, and make sure you receive the maximum match If your employer offers a 401(k) plan, they likely also offer an employer match. The employer match can …
What is a Multiple Employer Plan? A multiple employer plan (MEP) is a type of employee benefit plan where several employers can participate. In certain instances, the employers participating in the plan can operate as one plan. What are the benefits? A significant reason why employers do not offer a benefit plan to their employees …
Many payroll companies and third-party administrators (“TPA”) ascertain Service Organization Controls (“SOC 1”) Reports on the Suitability of the Design and Operating Effectiveness of Controls. These reports summarize the opinion and results of the audit of internal controls in place at the service provider. In addition, these reports provide complementary user entity controls, which list …
There are two common insurance policies that relate to employee benefit plans: an ERISA fidelity bond and fiduciary liability insurance. Both help lower risk but only one of the policies – the ERISA fidelity bond – is required by the Employee Retirement Income Security Act (ERISA) administered by the Department of Labor (DOL). An ERISA …
There are numerous types of prohibited transactions. Prohibited transactions are defined as certain transactions between a retirement plan and a disqualified person (broadly a person with some involvement with the retirement plan) that would cause the plan/plan sponsor to be in violation of Employee Retirement Income Security Act of 1974 (ERISA). One type of prohibited …