Many retirement plans are designed to include a feature that allows the plan sponsor to make a profit sharing contribution each year. Since IRS rules allow the contribution to be discretionary ...
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401(k) Q&A
Extra! Extra! Stay up to date on the latest news about the DWC team.
The retirement plan landscape is ever evolving. We distill the details so you don’t have to!
We’ve corralled the best news from inside the beltway – not only regulations, but also new legislation from Congress as well as relevant guidance from the IRS and Department of Labor. In true DWC fashion, we don’t just repackage a recitation of the rules, we provide our thoughts and commentary about what those rules mean to you.
We know cash balance rules can be intimidating! Settle into the Cash Balance Corner and let us break it down for you.
Have 401(k) questions? We have 401(k) answers! We bring you answers to many of the common questions we receive.
A behind-the-scenes look not at how the sausage is made, but why we make it the way we do. (Hint: It’s all about the best interests of the client.)
We’re all about learning from other people’s (alleged) mistakes. We might not be attorneys, but we still follow benefits-related cases and summarize lessons and key take-aways. No hourly fee needed for these insights!
A deeper dive into retirement plan topics doesn’t have to be headache-inducing. Our Pension Primer articles provide depth of information without depth of jargon!
Both the Internal Revenue Service (IRS) and the Department of Labor (DOL) consider it a top priority to make sure that contributions employees make to their 401(k) and 403(b) plans are deposited on a ...
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The deadline for depositing employee salary deferrals into the plan is relatively straightforward; however, the same cannot be said for company contributions such as matching and profit sharing ...
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Although the notion of company ownership seems relatively straight-forward, Congress was concerned that companies could use “creative” ownership structures to avoid certain laws. As a result, they ...
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Twenty Questions: Retirement Plan Loan Style
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If you are a current plan sponsor or are considering setting up a 401(k) plan, you may have heard the term ‘safe harbor’ mentioned. You may have been told that a safe harbor feature would benefit ...
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Facts We have been thinking about setting a safe harbor 401(k) plan and have heard that there are some pretty stringent timing requirements depending on some of the provisions we select.
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DWC
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Can We Tweak our 401(k) to Allow Additional Savings for Reasons More Immediate than Retirement?
Facts Our company takes a holistic approach to the benefits we offer. We want our employees to have access to benefits that assist them with their overall financial security. We offer several health ...
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Every 6 years or so, the IRS requires the vast majority of company-sponsored retirement plans to update their plan documents through a process called "restating" the document. For 401(k) and other ...
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Facts My company has sponsored a 401(k) plan for many years, and it provides for a discretionary matching contribution. I’ve always sought to build in as much flexibility as possible, so having ...
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Facts We currently sponsor a 401(k) plan and have been debating adding a safe harbor provision for 2021. While the idea of buying our way out of the ADP/ACP tests is appealing, we’re nervous about ...
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Facts We currently sponsor a 401(k) plan for our company. While we certainly want to be able to provide meaningful benefits to the owners, our goal is to encourage all our employees to save more for ...
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DWC
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Do We Have to Consider Pay Before a Participant is Eligible When Calculating Matching Contributions?
Facts Each year, after our last payroll in December, I submit my census information to the TPA for our 401(k) plan. Even though I’ve looked at each participant’s total deferrals for the year to ...
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DWC
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Retroactively Decided Not to Make Safe Harbor Contributions for Your HCEs? We've Got a Fix (or Two) for That!
If you’ve been with us for a while you’ve heard us say a few things time and again. First, the rules and regulatory agencies do not allow plans to disproportionately favor highly compensated ...
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Facts My company sponsors a 401(k) plan that provides for a discretionary matching contribution, which we deposit each pay period along with employee deferrals. Given the economic uncertainty, I’m ...
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Facts Given the current uncertainty in the world economy and the unknown ongoing affects of coronavirus, I’m looking at all financial obligations for our company, and for opportunities to reduce ...
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Facts My company sponsors a safe harbor 401(k) plan and every year my TPA sends me a reminder to distribute a notice to participants. It’s not the biggest hassle but I’ve wondered if it’s really ...
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Facts Larry and Kent are both participants in our company’s 401(k) plan. Both recently went back to school on a part-time basis to pursue graduate degrees and will continue working for us. Each of ...
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If you are a current plan sponsor or are considering setting up a 401(k) plan, you may have heard the term ‘safe harbor’ mentioned. You may have been told that a safe harbor feature would benefit ...
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Facts Our business currently has a retirement plan and we are considering adding automatic enrollment. We have heard that there are new tax credits available to employers who include automatic ...
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Facts As the owner of a beachside hotel, I sponsor a calendar year 401(k) plan for my employees. In the summer we hire many part-time employees to assist with the uptick in guests and activities. Our ...
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Facts We are considering adding automatic enrollment to our 401(k) plan. We’ve read some of the other posts on your website about EACAs and QACAs, but that all seems like a lot of extra complexity ...
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Facts Our 401(k) plan allows participants to take loans from their accounts. We have a written policy that describes how the loans work and spells out the requirements that the plan and participants ...
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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 ...
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DWC
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Is It Possible to Split Eligibility to Allow for Deferrals but to Postpone Safe Harbor Contributions?
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 ...
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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 ...
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Facts My company sponsors a 401(k) plan, and we fail the annual ADP test pretty consistently. We really want to increase participation; not only to help our test results, but also to encourage our ...
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Facts 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 ...
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Facts 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 ...
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Facts 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 ...
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Facts 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 ...
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We’ve been through a few Corrections of the Quarter together now, and we appreciate you being along for the ride. We feel this is pretty good stuff but, at the heart of it all, we’re pension geeks ...
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Facts We recently had one of the participants in our 401(k) plan ask if it is possible to convert her balance from pre-tax to Roth. She has been a participant in our plan for many years and has both ...
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Facts Our company sponsors a safe harbor 401(k) plan. Each participant receives a safe harbor nonelective contribution equal to 3% of his or her annual pay. Our TPA calculates the safe harbor ...
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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 ...
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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 ...
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Date & Deadline Deadline Description January January 31 Forms 1099-R Due to Participants The custodian/directed trustee of the plan delivers Forms 1099-R directly to the participants. Please ...
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DWC
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Safe Harbor 401(k) Match vs. Nonelective: Two Words for the Same Thing or Two Different Options
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 ...
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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 ...
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Facts Our company sponsors a 401(k) plan. One of our newer employees, Jane Smith, met the eligibility requirements and should have joined the plan on January 1st. Due to an oversight, we forgot to ...
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Facts As a plan sponsor, I do my best to review the annual compliance reports my TPA sends to me, but to be honest, it might as well be written in a foreign language. For example, several of our ...
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Facts Our TPA just sent us our annual compliance report, and it says we failed testing! This is the first year we’ve failed anything, and now we’re being told that we need to take money out of the ...
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Facts I am fed up with sponsoring my current retirement plan. My wife and I contribute the maximum amount we can in deferrals each year. Due to low participation by our employees, we fail ADP testing ...
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Facts I sponsor a 401(k) Plan for myself and my staff. I recently processed a hardship distribution for the purchase of my primary residence in October 2018. I know the rules require me to suspend my ...
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Facts Our company sponsors a safe harbor 401(k) plan that provides a matching contribution equal to 100% of the first 4% each participant defers. I had always thought that the deadline for us to ...
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While it might not seem like that big of a deal if 401(k) deposits are made a couple days or weeks late, the Department of Labor (DOL) considers those payroll withholdings to be plan money on the ...
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Facts Our 401(k) plan provides for a matching contribution of 50% of the first 6% deferred by each participant (for a maximum match of 3% of pay per year). We deposit the matching contributions to ...
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Facts Our 401(k) plan failed the ADP test for the first time this year. We decided to correct the failure by making refunds to the highly compensated employees instead of making additional ...
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Facts Our 401(k) plan allows new employees to make contributions on the first day of the quarter after they work for us for a year. All of our full-time employees have been with us for a long time. ...
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Facts When certain employees terminate employment with our company, we agree to continue severance payments for a period of time after they leave. Some of these employees have asked us to continue ...
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Facts ABC Company maintains a 401(k) plan that includes the following provisions: It operates on a calendar year. Compensation is defined as W2 wages with pre-tax deferrals added back and no ...
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Facts Our company has a 401(k) plan that provides a matching contribution equal to 100% of the first 4% that each employee contributes. We set it up that way to ensure that our highly compensated ...
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Facts A participant in our 401(k) plan took out a loan a couple years ago. She could only afford to make the bare minimum payments at the time, but is now in a financial position to pay down the loan ...
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DWC
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401(k) Distribution Rules: After Taking a Hardship Distribution, How Quickly Must a Participant Stop 401(k) Contributions?
Facts A participant in our 401(k) plan recently took a hardship distribution. We know we are supposed to suspend his deferrals for six months following the distribution, but we are not entirely clear ...
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Facts Every couple of years, our 401(k) plan fails the ADP/ACP test by a small margin. Since we don’t always fail the test, gathering our year-end census information to send to our TPA sometimes ...
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Facts Due to a glitch in our payroll system, one of the participants in our 401(k) plan contributed more than the IRS limit last year. It came to light while she was preparing her individual income ...
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Facts Our company sponsors a safe harbor 401(k) plan with a match, and we also make a profit sharing contribution each year. Our payroll company calculates match and profit sharing contributions ...
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Facts We are planning to establish a new 401(k) plan for our employees. Between getting set up with a recordkeeper, selecting the investment menu, working with our TPA to prepare the plan documents ...
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Facts I am self-employed, and my business is doing well. As a result, I would like to setup a retirement plan so that I can not only set aside some income for retirement but also to help with my ...
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Facts Like many 401(k) plans, ours allows employees to decide where to invest their accounts among a menu of approximately 20 different mutual funds. For employees who do not make an investment ...
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Facts I and my three business partners each own 25% of our company. We do not have any employees other than the four of us. We would like to set up a retirement plan, but we know there are ...
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Facts Our company sponsors two separate 401(k) plans. One covers salaried employees, and the other one covers hourly-paid employees. From time to time, employees change from hourly to salaried and ...
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Facts 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 ...
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Facts We have considered automatic enrollment for our 401(k) plan but have, thus far, decided not to implement it. However, for our employees that do sign up to defer, we would like to offer them a ...
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Facts Our company sponsors a safe harbor 401(k) plan that provides for a dollar-for-dollar match up to 4% of pay. At the end of each year, we calculate the total matching contribution, and we usually ...
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What are required minimum distributions (RMDs)? When a taxpayer reaches age a certain age, he or she must begin withdrawing minimum amounts from all tax-favored retirement accounts each year. This ...
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