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

DWC 05/28/20
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.  ...
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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 ...
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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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What Tax Credits are Available for Setting Up a New Retirement Plan?

DWC 01/14/20
Facts Our business is thinking of setting up a retirement plan. We’ve heard that there are new tax credits offered under the SECURE Act available to employers who set up new plans.
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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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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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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 ...
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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.
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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.
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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 ...
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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.