Our first piece of advice for audited plan sponsors? Don't panic.
Topic Archive: DWC
We have a 401(k) plan that includes several different types of contributions—employee deferrals, a company-provided safe harbor match, and a profit sharing contribution. The plan has a 6-year graded vesting schedule.
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 notify our highly compensated employees of the maximum they can contribute each year to ensure we pass testing.
Retirement plan compliance is a big deal to the IRS. After all, the tax deductions that both plan sponsors and participants receive each year for contributions to retirement plans surpass deductions taken for charitable donations and health insurance premiums. With so much at stake, the IRS wants to be sure everyone is playing by the rules.
Contrary to what some people may think while writing out checks for penalty fees, the IRS doesn't actually want to find compliance issues in retirement plans.
The owner of our company is retiring next year, and the business will close as a result. We sponsor a 401(k) plan that we know we need to terminate, and we want to get started right away so that we have plenty of time to wrap things up before the company is dissolved next year. There are several former employees who still have balances in the plan, but most of the plan accounts are for employees who will continue working for the company right until the very end.
A participant in our retirement plan just passed away. When we were reviewing our files, we were glad to see that he had completed a beneficiary designation form. On closer review, however, we noticed that the form does not have the name of the plan listed. It has his name, details about his intended beneficiaries and even a stamp showing the date we received it from him, but the plan name is missing.
It's official: DWC is uniting with Hawkins Retirement, a Utah-based firm that provides comparable 401(k) plan compliance, defined benefit services, and consulting services (third-party plan administration), under the DWC brand.
One of the owners of our company is 73 years old. She remains actively employed by the company and does not show any signs of cutting back or quitting any time soon. She has accumulated a significant account balance in the 401(k) plan and has been taking her required minimum distributions (RMDs) each year since she reached age 70 ½.
Our 401(k) plan requires employees to work for us for six months before they become eligible to join. Pretty much all of our employees have been full time and have worked continuous, nine-to-five-type schedules.