Our 401(k) plan failed the ADP test for the first time this year. We decided to correct the failure by making refunds to the highly compensated employees instead of making additional contributions for the other participants. However, when we got the actual refund amounts from our TPA, we were surprised to see that those HCEs with the highest deferral percentages are to receive smaller refund amounts.
People in the retirement plan business sure do like their acronyms. All these letters get thrown around, and I do not know what half of them mean.
People in the retirement plan business sure do like their acronyms. All these letters get thrown around, and I do not know what half of them mean.
I and my three business partners each own 25% of our company. We do not have any employees other than the four of us. We would like to set up a retirement plan, but we know there are nondiscrimination tests that limit how much owners can benefit based on how much the employees receive.
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.
Whether we’re talking fashion or music or architecture or barber shops, it seems things that have faded from existence eventually come back around. See if this cycle looks familiar: cutting edge becomes status quo becomes so last week becomes so [insert decade] becomes retro becomes vintage.
Get our 401(k) and defined benefits content delivered directly to your inbox.
As Featured In
