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

How Can We Add More Flexibility to our Standard Profit Sharing Contributions?

DWC 10/13/20

DWC 401(k) Q&A: Adding Flexibility to Profit Sharing Contributions

Facts We have made profit sharing contributions each year, and we plan to continue to do so every year that our financial situation allows. Historically, we have contributed the same percentage of pay for each person, but your previous Question of the Week about using the profit sharing feature to reward certain key performers piqued our interest.

Can We Add a Safe Harbor Provision While Maintaining Flexibility in Contribution Costs?

DWC 09/22/20

DWC 401(k) Q&A Question of the Week: Adding Safe Harbor Provision, Maintaining Contribution Cost Flexibility

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.

Your Definition of Compensation Isn't in the ERISA Dictionary? We've Got a Fix for That.

DWC 08/27/20

Getting creative with the plan’s definition of compensation can be an effective way to target benefits, budget your benefit dollars, and maintain consistent benefit levels from year to year. However, with that creativity comes added layers of testing and compliance to concern yourself with. And, if you sponsor a safe harbor plan, those rules can ...

Can We Offer Additional Matching Contributions Without Losing our Safe Harbor Status?

DWC 08/4/20

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 their retirement, and to reward those who do. We were failing our annual testing, so we implemented a safe harbor provision to provide a matching ...

Can We Offer Higher Profit Sharing Contributions to Employees Based on Performance?

DWC 07/28/20

Facts We’ve had a 401(k) plan for years, but we are now looking at ways to make it a more strategic part of our overall compensation package. In one of your previous Questions of the Week, you mentioned that we cannot really give employees the choice between higher pay or a profit sharing contribution, but we would like to explore ways to use ...

Can We Increase Profit Sharing Contributions and Decrease Salaries to Improve Testing and Save Money?

DWC 07/21/20

Facts We want to make job offers to some new employees and are looking strategically at our overall compensation package. Some of these candidates are seeking upwards of $130,000 which will make them highly compensated employees (HCEs) in 2021. We are thinking about negotiating a lower salary of $100,000 with a promise of $30,000 in profit sharing ...

401(k) vs 403(b): Which Is the Best Choice for My Non-Profit?

DWC 06/23/20

DWC 401(k) Q&A: 401(k) vs. 403(b) - Which Is the Best Plan Design for My Non-Profit?_Retirement Plan Design

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.

Retroactively Decided Not to Make Safe Harbor Contributions for Your HCEs? We've Got a Fix (or Two) for That!

DWC 05/28/20

DWC 401(k) Q&A Correction of the Quarter: Retroactively Decided Not to Make Safe Harbor Contributions for HCEs?

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 employees (HCEs) relative to the non-HCEs. Second, a plan sponsor must be very careful about how and when it implements or removes benefits from the plan. ...

Short Plan Years... Lookback Years... What (and When) Are They and Why Do I Care?

DWC 02/11/20

Facts My company started a brand new 401(k) plan last year. We didn’t start the plan until July 1, and since we operate on the calendar year, our first “year” of the plan will only be the six-month period from the start date through December 31, 2019. Now, our TPA is asking us for the compensation we paid to each of our employees during the ...

Is It Too Late to Set Up a Retirement Plan to Get a Tax Deduction for Last Year?

DWC 01/21/20

Facts Although my New Year’s resolutions include less procrastination it’s likely that by the time Valentine’s Day gets here that good intention will long be in my rear view. As I draft these 2020 resolutions, my CPA reminds me once again of all the tax benefits, personal and corporate, that a qualified retirement plan can offer. Finding ...

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