401(k) Q&A | Plan & Industry Content From DWC - The 401(k) Experts

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 ...

How Do We Identify Highly Compensated Employees for the First Year Our Company Exists?

DWC 08/27/19

QOTW - 8.27.2019 - How Do We Identify HCEs for the First Year Our Company Exists - Plan Compliance

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.

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.

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 ...

What Does Safe Harbor Mean, Exactly?

DWC 05/28/19

QOTW - 5.28.2019 - What Does Safe Habor Mean Exactly - Plan Compliance

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.

Top Heavy vs. ADP: What's the Difference?

DWC 05/7/19

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 participants were recently required to receive corrective refunds due to contributing too much for 2018. I thought it was because our plan was top heavy ...

We Failed the ADP Test! What Did We Do Wrong and How Do We Fix It?

DWC 02/26/19

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 plan in order to remedy the failure. I don’t understand why this is happening.

How Can We Pass Nondiscrimination Testing with Low Non-HCE Participation?

DWC 01/22/19

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 every year and have to take refunds.

Can We Reduce the Number of HCEs in our Plan?

DWC 01/15/19

Facts We set up our company 401(k) plan soon after we started our business. At the time, we were a small tech company with only a couple of employees. Over the years the company has grown exponentially, and business has been good to us…really good. Because of this, the demographics of our company have changed completely. We have too many of our ...

What Is a True-Up Matching Contribution?

DWC 09/18/18

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 the plan each pay period at the same time we deposit employee deferrals. After year-end for the last couple of years, our TPA has informed us that we ...

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