We are thinking of adding automatic enrollment to our 401(k) plan. One of our concerns, however, is that we might end up with a bunch of tiny account balances for participants who forget to opt out until they see their first paycheck with automatic deferrals taken out.
Our company has about 200 employees, and we launched a new 401(k) plan on October of last year. We were eager for all of our existing employees to get excited about this new benefit, so we waived the waiting period to join so that everyone would be eligible on day one. The good news is that it worked, and we had a lot of our employees sign up for the plan. The bad news is that no one warned us ahead of time (and that our current TPA just told us) that we must have the plan audited for that three-month period because we have more than 100 employees eligible when we launched the plan. Adding insult to injury, we have to rush to get it done in time to file our first Form 5500 by October 15th! Yikes!
The participants in my company’s 401(k) plan are regularly inquiring about how much money they have available for a loan. When I report back the amount available to them, it’s not unusual for me to hear groans and exclamations from them that “this is my money” (particularly if they’re disappointed they aren’t able to access more). I know there are certain parameters related to participant loans set forth in the plan document, but it seems like there’s more to the magic formula that I’m just not able to explain to the participants.
Welcome to the finale of our series on the Department of Labor’s new regulations, updating the definition of “Employer” under ERISA to extend the availability of multiple employer plans to more businesses.
We’ve covered a lot of ground so far:
Our company sponsors a 401(k) plan, but very few of our participants are contributing. We started the plan as an added benefit to help attract and retain employees, but we also truly want to encourage our employees to save for retirement. I’ve heard a lot about something called automatic enrollment and how it can be a great tool to get people to save, but I really don’t know much more about it.
All of us here at DWC thrive on the really geeky stuff, and some of the best discussions start with our pontifications about how different topics impact our clients and our industry. We decided to bring the best of those conversations to you, still with a touch of geekiness but also distilled into easily digested, bite-sized pieces.
What are some potential unknown risks plan sponsors may face with respect to their plans? This quarter our experts have broken down some of the most common risks facing retirement plans, and what you can do to protect yours.
- As originally published in our Q3 2019 newsletter. Didn't get it? Sign up here.
The Department of Labor’s new regulations that expand the availability of multiple employer plans cover quite a bit of ground. In previous posts, we’ve explored Association MEPs, PEO MEPs, Corporate MEPs, and working owners.
Though not technically part of the regulations themselves, the Department of Labor also addresses a grab bag of questions that came in through the comment process in the preamble. In this post, we will run through some of those items.
My company used to sponsor a 401(k) plan for my employees. Due to an unforeseen financial hardship, we terminated the plan two years ago. Now that we are back on solid footing, I would like to start up another 401(k) plan. I checked with the TPA we were working with, and they said something about a possible successor plan issue. I’m not really sure what that means.
Thanks to the Department of Labor’s recently published regulations, we went from just having multiple employer plans top having several different types of MEPs. We’ve already covered association MEPs and PEO MEPs, so now it is time to take a quick look at what the DOL calls “corporate MEPs.”
We established our company on February 1st of this year, and now we are planning to launch our 401(k) plan. We know there are number of tests and determinations that require us to look at company history, but as a new company, we don’t really have much of a history to look at.
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