Author Archive: DWC

What is a Suspense Account and Can We Use Our Forfeiture Account Instead?

DWC | 12/3/19

Facts

The annual compliance report that our TPA provided to us indicates that we over-funded matching contributions for certain employees and instructs us to transfer the excess amounts out of the affected participants’ accounts and into a plan suspense account.  The only problem is that I am not sure what a suspense account is.  When I spoke to our recordkeeper, they said we have a forfeiture account but not a suspense account.

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Tradition vs. Taste: What Classic Thanksgiving Dish Do You Secretly Dislike?

DWC | 11/26/19

Facts

Every year we gather with family and friends to stuff ourselves silly in honor of the first harvest here in the New World. Since that time, families have perfected and passed down Turkey Day recipes that have become staples on the dinner table. 

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When More (Plans) Isn't Merrier: We've Got a Fix for That!

DWC | 11/21/19

Stop us if you’ve heard this one before – a SEP, a SIMPLE, and a 401(k) walk into a bar…unfortunately, there’s not a great punch line at the end of this one.  Instead of some good laughs, this situation is a recipe for some issues in need of attention.  While it might be unusual for a single company to establish one of each, it is not nearly as far-fetched to discover that related companies may have setup separate types of plans for their respective employees, one with a SEP or SIMPLE and another with a 401(k) plan.  This isn’t necessarily a problem with respect to the 401(k) plan, but the SEP and SIMPLE rules restrict how those types of plans can co-exist with others.

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Are Rehires Immediately Eligible for our 401(k) Plan?

DWC | 11/19/19

Facts

We just rehired an employee that used to work for us but who terminated almost 4 years ago.  She was eligible for our 401(k) plan during her previous tenure but took a distribution of her account shortly after she left.

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What is a Short Plan Year and What Does It Mean for My Deferrals?

DWC | 11/12/19

Facts

Our company operates on a calendar tax year, but our 401(k) plan runs on a fiscal year ending each June 30th.  It is a real hassle to manage two different year-ends, so we asked our TPA about aligning the two.  They said we could amend the plan to make that happen, but there is also something about it creating a short year which would require us to go through year-end compliance testing twice during the transition.

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The 2020 Retirement Plan Contribution Limits

DWC | 11/6/19

The IRS has released the 2020 contribution limits! Since not everyone was awaiting them quite as eagerly as we were, here is a quick summary.

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What Do You Do with the SIMPLE IRA Sponsored by the Company You Just Acquired?

DWC | 11/5/19

Facts

My company recently acquired another firm.  As we work to combine all of our operations, we’ve discovered a few differences in our employee benefits, specifically our retirement plans.  While we’ve sponsored a 401(k) plan for several years, the company we bought has a SIMPLE IRA.  I’ve done a little research and found that when a company offers a SIMPLE, it cannot also sponsor any other types of plans.

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Is It Possible to Split Eligibility to Allow for Deferrals but to Postpone Safe Harbor Contributions?

DWC | 10/29/19

Facts

We allow new employees to join our 401(k) plan on the first of the month after they are hired.  They become eligible to make deferrals and also receive the company safe harbor contribution at that time.  We don’t have high turnover, but employees who leave often do so within the first year of joining us.  We don’t mind allowing new hires to contribute to the plan out of their own paychecks, but since safe harbor contributions must be immediately vested, it feels like we are wasting company money by giving a contribution to someone who might leave in a relatively short timeframe.

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DWC News Update | Two Years in the Making: The Final IRS Hardship Distribution Regulations Are Here

DWC | 10/24/19

It’s been a while, but we finally have them! Late last month, the IRS published the final hardship distribution regulations, nearly two years after Congress passed the Bipartisan Budget Act and the Tax Cuts and Jobs Act. The good news is that this final version follows the proposed version very closely. So closely in fact, that the IRS outright states in the final version that any plan that followed the proposed regulations will satisfy the final regulations.

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Are We Required to Make Safe Harbor Contributions for HCEs?

DWC | 10/22/19

Facts

My company sponsors a safe harbor 401(k) plan so that all of the highly compensated employees can maximize their deferrals without worrying about failing the ADP test each year.  Although we fully intend to make the same level of contribution for the HCEs that we do for the non-HCEs, we would prefer to not to be required to do so in order to maintain flexibility with our cash flow.

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