Highly Compensated Employees

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The retirement plan landscape is ever evolving. We distill the details so you don’t have to!

We’ve corralled the best news from inside the beltway – not only regulations, but also new legislation from Congress as well as relevant guidance from the IRS and Department of Labor. In true DWC fashion, we don’t just repackage a recitation of the rules, we provide our thoughts and commentary about what those rules mean to you.

We know cash balance rules can be intimidating! Settle into the Cash Balance Corner and let us break it down for you.

Have 401(k) questions? We have 401(k) answers! We bring you answers to many of the common questions we receive.

A behind-the-scenes look not at how the sausage is made, but why we make it the way we do. (Hint: It’s all about the best interests of the client.)

We’re all about learning from other people’s (alleged) mistakes. We might not be attorneys, but we still follow benefits-related cases and summarize lessons and key take-aways. No hourly fee needed for these insights!

A deeper dive into retirement plan topics doesn’t have to be headache-inducing. Our Pension Primer articles provide depth of information without depth of jargon!

10/22/24

DWC | 10/22/2024

Attribution of Ownership FAQs

Although the notion of company ownership seems relatively straight-forward, Congress was concerned that companies could use “creative” ownership structures to avoid certain laws. As a result, they ...

DWC | 06/8/2024

Who Are Highly Compensated & Key Employees?

DWC | 07/29/2021

The Mega Backdoor Roth…Here We Go Again

Every year, the financial press seems to write about the so-called Backdoor Roth and Mega Backdoor Roth strategies in 401(k) plans, and this year is no exception. (Maybe the Super Duper Mega Backdoor ...

DWC | 04/8/2021

Nondiscriminatory Benefit Amounts - Treat Me Right

Outside the complex world of qualified plans, the term “nondiscrimination” can take on many different meanings based on many different points of view. Fortunately, in the qualified plan world, the ...

DWC | 03/11/2021

Minimum Plan Participation - With or Without You

Sponsoring a retirement plan can provide significant benefits to a company (and its participants). But with great benefits comes great responsibility…responsibility to follow all of the various ...

DWC | 02/11/2021

Nondiscrimination Testing Creates Career Opportunites

Sponsoring a retirement plan can provide significant benefits to a company (and its participants). But with great benefits comes great responsibility…responsibility to follow all of the various ...

DWC | 02/2/2021

Why Does My Year-End Census Require Ownership and Family Information?

Facts We’ve compiled our year end census information, and we are now turning out attention to the accompanying questionnaire. I’m being asked for additional information such as ownership percentages, ...

DWC | 01/19/2021

Which Financial Details Do I Report On My Year-End Census?

Facts Last week, you explained some the demographic data points that get reported on the annual census. Now, I’ve got some questions on the financial information I’ve been asked to provide to my TPA. ...

DWC | 12/1/2020

Overtime Is Up and Bonuses Are Down: Will This Year's Irregular Compensation Impact our Retirement Plan?

Facts We sponsor a 401(k) plan for our employees and provide a company matching contribution to those who defer. Our plan specifies that in calculating that match, we only consider employee base pay ...

DWC | 11/24/2020

DWC's Thanksgiving Dinner Prep Playlist

Facts All year long we've been leaving little rock 'n' roll Easter eggs in our Cash Balance Corner feed. ICYMI: Each post title incorporates one of our favorite songs. And for our 20th century rock ...

DWC | 11/17/2020

How Do Furloughed Employees Impact Our Plan at Year-End?

Facts Like many businesses, we had to furlough some employees earlier this year in response to the coronavirus shutdowns. We’ve been fortunate enough to bring back a few of these employees, but a ...

DWC | 11/10/2020

Are There Plan Design Options We Should Consider as Part of the Mandatory Cycle 3 Plan Document Restatement?

Facts We’ve been following your recent posts about how making even small changes to certain plan provisions can make managing the plan easier without sacrificing our objectives. Making life easier, ...

DWC | 10/13/2020

How Can We Add More Flexibility to our Standard 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 ...

DWC | 09/22/2020

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

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 ...

DWC | 08/27/2020

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

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, ...

DWC | 08/4/2020

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

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 ...

DWC | 07/28/2020

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

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 ...

DWC | 07/21/2020

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

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 ...

DWC | 06/23/2020

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

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 ...

DWC | 05/28/2020

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

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 ...

DWC | 02/11/2020

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

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 ...

DWC | 01/21/2020

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

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 ...

DWC | 01/14/2020

What Tax Credits are Available for Setting Up a New Retirement Plan?

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.

DWC | 08/27/2019

How Do We Identify Highly Compensated Employees for the First Year Our Company Exists?

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 ...

DWC | 06/18/2019

How Can We Improve ADP/ACP Test Results Without Offering Safe Harbor?

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 ...

DWC | 05/7/2019

Top Heavy vs. ADP: What's the Difference?

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 ...

DWC | 02/26/2019

We Failed the ADP Test! What Did We Do Wrong and How Do We Fix It?

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 ...

DWC | 01/22/2019

How Can We Pass Nondiscrimination Testing with Low Non-HCE Participation?

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 ...

DWC | 01/15/2019

Can We Reduce the Number of HCEs in our Plan?

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 ...

DWC | 10/2/2018

Why Does Your TPA Need Personal & Ownership Details from Company Owners?

Facts Our company sponsors a 401(k) plan for our employees. The owners of the company have always been somewhat secretive in terms of sharing detailed information about themselves and their families. ...

DWC | 08/21/2018

How Are Corrective Refunds Determined for a Failed ADP Test?

Facts 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 ...

DWC | 08/14/2018

Decoding the Alphabet Soup: What's With All the Acronyms? | Part 2

Facts 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.

DWC | 07/24/2018

Decoding the Alphabet Soup: What's With All the Acronyms? | Part 1

Facts 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.

DWC | 11/14/2017

Do 401(k) Testing Requirement Apply to Owner-Only Plans?

Facts 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 ...

DWC | 10/10/2017

When Can We Change Our ADP/ACP Testing Method?

Facts 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 ...

DWC | 06/23/2017

Nondiscrimination Testing Overview

When creating the retirement plan system, Congress included significant tax benefits as an incentive for employers to put plans in place and for employees to save for their own retirement. It was ...

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Decoding the Alphabet Soup: What’s With All the Acronyms | Part 6

Decoding the Alphabet Soup: What’s With All the Acronyms | Part 5

Decoding the Alphabet Soup: What’s With All the Acronyms | Part 4

In Case of Emergency, (Don't) Break Plan!

ESG Isn't Dead...Yet

Form 5500 – File It Late or Incomplete?

"Complete Control" with Recommended Contributions

“Cover Me” with the Pension Benefit Guaranty Corporation

10 Common Retirement Plan Compliance Failures Found by the IRS

2020 DOL Enforcement Stats: Is the Glass Half Full or Half Empty?

2020 Retirement Plan Tax Deductions - It's Not Too Late

401(k) Distribution Rules: After Taking a Hardship Distribution, How Quickly Must a Participant Stop 401(k) Contributions?

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Highly Compensated Employees

Extra! Extra! Stay up to date on the latest news about the DWC team.

The retirement plan landscape is ever evolving. We distill the details so you don’t have to!

We know cash balance rules can be intimidating! Settle into the Cash Balance Corner and let us break it down for you.

Have 401(k) questions? We have 401(k) answers! We bring you answers to many of the common questions we receive.

A behind-the-scenes look not at how the sausage is made, but why we make it the way we do. (Hint: It’s all about the best interests of the client.)

We’re all about learning from other people’s (alleged) mistakes. We might not be attorneys, but we still follow benefits-related cases and summarize lessons and key take-aways. No hourly fee needed for these insights!

A deeper dive into retirement plan topics doesn’t have to be headache-inducing. Our Pension Primer articles provide depth of information without depth of jargon!

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