The IRS has released the 2018 contribution limits! Since not everyone was awaiting them quite as eagerly as we were, here is a quick summary.
Our first piece of advice for audited plan sponsors? Don't panic.
We have a 401(k) plan that includes several different types of contributions—employee deferrals, a company-provided safe harbor match, and a profit sharing contribution. The plan has a 6-year graded vesting schedule.
Service providers are judged by by many factors and one of the most important is managing to zero service issues. And considering how important plan compliance is, issues with plan compliance via a government audit is not considered a factor—until it is.
We have a 401(k) plan that allows for both employee deferrals and a company match. Our annual testing each year is based on the amounts contributed in the previous year. That has allowed us to notify our highly compensated employees of the maximum they can contribute each year to ensure we pass testing.
Retirement plan compliance is a big deal to the IRS. After all, the tax deductions that both plan sponsors and participants receive each year for contributions to retirement plans surpass deductions taken for charitable donations and health insurance premiums. With so much at stake, the IRS wants to be sure everyone is playing by the rules.
We have selected a new recordkeeper for our 401(k) plan. We are told that there will be a period of eight business days when our participants are not able to log in and manage their accounts. We know that we have to provide notice at least 30 days ahead of time to everyone who is affected.
Contrary to what some people may think while writing out checks for penalty fees, the IRS doesn't actually want to find compliance issues in retirement plans.
The owner of our company is retiring next year, and the business will close as a result. We sponsor a 401(k) plan that we know we need to terminate, and we want to get started right away so that we have plenty of time to wrap things up before the company is dissolved next year. There are several former employees who still have balances in the plan, but most of the plan accounts are for employees who will continue working for the company right until the very end.
A participant in our retirement plan just passed away. When we were reviewing our files, we were glad to see that he had completed a beneficiary designation form. On closer review, however, we noticed that the form does not have the name of the plan listed. It has his name, details about his intended beneficiaries and even a stamp showing the date we received it from him, but the plan name is missing.