What Do We Need to Consider When Switching from a SIMPLE IRA to a 401(k)?

DWC | 07/9/19

Facts

We’ve sponsored a SIMPLE IRA for our employees for years and while it’s served its purpose, we are beginning to feel the limitations inherent in the plan.  As we begin to grow, we’d love to be able to add provisions for eligibility and to be able to reward our key performers.  I’m hesitant about making a change from this “known” commodity to a 401(k) plan but feel like we’ve outgrown our current plan.

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DWC News Update: A Bad Apple a Day Keeps the MEP Away

DWC | 07/8/19

One of the drawbacks that is often cited about multiple employer plans is the so-called “one bad apple rule.”  It provides that if a single participating employer in a MEP allows its part of the plan to operate in a non-compliant manner, it puts the entire plan and all of the other participating employers at risk.  Although there have been numerous proposals in Congress to eliminate the one bad apple rule, none have made it across the finish line.

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Which Comes First: The Contribution or the K-1?

DWC | 06/25/19

Facts

As a self-employed individual, I run a successful business and have set up a retirement plan to provide for tax-sheltered savings.  When its time to determine the contribution amount each year, it feels more complicated than running the business.  My CPA seems to be waiting on our TPA, and the TPA waiting on the CPA – and amidst it all, I’m just waiting on my numbers!

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How Can We Improve ADP/ACP Test Results Without Offering Safe Harbor?

DWC | 06/18/19

Facts

My architectural firm sponsors a 401(k) plan.  We have 38 architects and 2 administrative assistants.  We currently provide a matching contribution to participants and, some years, a profit sharing contribution too.  I’m reluctant to utilize a safe harbor design, because I really value the vesting schedule on our employer contributions to help retain my best talent, but the plan frequently fails ADP and ACP testing.

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Safe Harbor 401(k) Match vs. Nonelective: Two Words for the Same Thing or Two Different Options

DWC | 06/11/19

Facts

I recently got a promotion at work, and one of my new job responsibilities is to help manage our company’s retirement plan.  It is a safe harbor 401(k) plan.  A number of our employees are about to become eligible for the plan, and they are asking me questions about the company matching contribution.  From what I can tell, we make a contribution for everyone who is eligible even if they are not contributing for themselves.

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Spouse or Not a Spouse? That is the Question...of the Week

DWC | 06/4/19

Facts

Our company has sponsored a 401(k) plan for a while and although it’s not new to us that certain situations - from beneficiary designations to annual nondiscrimination testing - might require us to provide information about spousal relationships, we are seeing that different types of relationships, and statuses, are becoming more commonplace.

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Feeling Defeated in the Battle of Participant Loans? We've Got a Fix for That.

DWC | 05/30/19

While not quite as ominous as a battle with the Night King, dealing with participant loans in retirement plans can be a daunting challenge for plan sponsors.  Because of Congress’ concerns about protecting plan assets from improper use by participants and plan sponsors alike, the loan rules are strict and unforgiving. 

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What Does Safe Harbor Mean, Exactly?

DWC | 05/28/19

Facts

When we set up our new 401(k) plan last year, we decided not to add a safe harbor provision because we were not in a position to commit to the required contribution.  Then we heard our TPA say something about our deferral deposits fitting within the safe harbor deadline.  Now I’m just confused.

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DWC News Update: House Passes the SECURE Act

DWC | 05/24/19

-A breakdown of breaking news from DWC's Managing Partner, Keith Clark

If you are reading the mainstream press, the SECURE Act being signed into law is just around the corner.  While the overwhelming bi-partisan approval in the House of Representatives is an important (and increasingly rare) development, there are still a number of steps that must occur before it becomes law:

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Which Compensation Do You Use When Your Company Fiscal Year is Different Than Your Plan Year?

DWC | 05/21/19

Facts

When we set up our 401(k) plan, our partnership operated on a fiscal year that ran from July 1st to June 30th.  We set the 401(k) plan year to line up with our company’s fiscal year.  We recently changed our company’s fiscal year to follow the calendar year and didn’t think to notify our TPA to discuss the impact to the Plan.  Now, they are asking for annual census information (including compensation) in order to prepare the profit sharing allocation and complete the required testing.

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The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.