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Overtime Is Up and Bonuses Are Down: Will This Year's Irregular Compensation Impact our Retirement Plan?

DWC 12/1/20
Facts We sponsor a 401(k) plan for our employees and provide a company matching contribution to those who defer. Our plan specifies that in calculating that match, we only consider employee base pay and exclude “irregular” forms of pay (specifically bonuses and overtime). This allows us to be more precise when we are building the expected cost of ...
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Can We Add a Safe Harbor Provision While Maintaining Flexibility in Contribution Costs?

DWC 09/22/20
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 the idea of a mandatory contribution. If cash flow isn’t what we expect in a given year, we don’t want to be stuck with expensive contributions.
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401(k) vs 403(b): Which Is the Best Choice for My Non-Profit?

DWC 06/23/20
Facts As the director of a not-for-profit organization, I’m looking at retirement plan options for our employees. The fiscal year ends June 30th and I’d love to implement something to benefit our employees beginning with the new year.
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Can We Suspend our Safe Harbor Contribution Mid-Plan Year?

DWC 03/24/20
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 risk.  We currently sponsor a 401(k) plan for our employees and provide a safe harbor contribution equal to 3% of employee compensation.
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Am I Now Required to Include Part-Time Employees in my 401(k) Plan?

DWC 01/28/20
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 plan has always required employees to reach age 21 and complete a year of service before becoming eligible.  Traditionally, this has meant that ...
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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 ...
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How Do We Identify Highly Compensated Employees for the First Year Our Company Exists?

DWC 08/27/19
Facts 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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Your Safe Harbor Actually Isn't? We've Got a Fix for That!

DWC 08/22/19
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 (no point in hiding it).  And while the rules and regulations get us going, we have a geeky passion for the opportunity to find creative solutions.
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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 ...
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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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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.