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Do We Have to Consider Pay Before a Participant is Eligible When Calculating Matching Contributions?

DWC 06/9/20
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 determine the matching contributions, the TPA almost always has true-up contributions for me to make.  Taking a closer look, it seems like these true-ups ...
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Should We Include Government-Mandated Coronavirus PTO When Calculating Company Contributions?

DWC 04/21/20
Facts We have several employees who have had to take time off from work either because of a loss of childcare or to care for affected family members due to the coronavirus.  As a result of recent legislation, they qualify to receive compensation during their leave from work.
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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 ...
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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 ...
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What Common Compliance Issues Should We Be Watching For?

DWC 03/19/19
Facts Our company sponsors a 401(k) plan, and we want to make sure we do everything correctly.  We have a great staff and have put processes in place to help ensure we operate the plan in a compliant manner.  With all the moving parts, however, there is still a concern that we might miss something.
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Can A Departing Employee Make 401(k) Contributions From Severance Pay?

DWC 07/10/18
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 withholding 401(k) contributions from their severance pay.
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Correcting a Failure to Withhold Deferrals from Eligible Compensation

DWC 06/28/18
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 exclusions. Eligible participants can defer up to the IRS limit $18,500 + $6,000 for those age 50 or older (2018 limits, indexed for inflation) The company ...
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What Compensation Should We Use to Calculate Company Contributions to our 401(k) Plan?

DWC 06/26/18
Facts Our company has a safe harbor 401(k) plan.  In addition to employees making deferrals, we make a company contribution equal to 3% of each person’s compensation.  We deposit both types of contributions each pay period, so in theory at least, we should be all set by the end of each year.  However, it seems that each year, our TPA comes back to ...
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Can Bonuses Be Excluded From Retirement Plan Compensation?

DWC 03/13/18
Facts Our company pays a number of different types of bonuses—signing bonuses, spot bonuses, holiday bonuses, production bonuses, etc. You get the idea. We know that bonuses paid once the employee has worked for us for a while count for purposes of the retirement plan, but we would like to carve out signing bonuses.
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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.