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Pension Primer

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’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!

DWC |

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

As if we didn’t have enough acronyms already, the SECURE Act and SECURE 2.0 brought us a bunch of new ones…apart from the fact that SECURE is an acronym itself. Speaking of pieces of legislation, ...
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DWC |

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

The fact that we are up to our fifth episode of Fun With Acronyms (with a sixth already in the queue) is telling of just how ridiculous all this geek-speak really is. Then again, we have FOMO, YOLO, ...
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DWC |

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

We in the retirement plan business sure do like our acronyms. In fact, it might actually be possible to carry on an entire conversation using only acronyms and no real words.
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DWC |

Form 5500 – File It Late or Incomplete?

Every year, we receive inquiries from plan sponsors unable to file the Forms 5500 for their 401(k) plans by the deadline. Though often due to the 5500 audit not yet being complete, there can any ...
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Historical contribution
DWC |

Historical Contribution & Testing Limits Chart

Contribution Limitations Limit Pro-Rate for Short Year* 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Annual Compensation Yes $345,000 $330,000 $305,000 $290,000 $285,000 $280,000 $275,000 ...
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DWC |

Form 1099-R Distribution Codes for Defined Contribution Plans

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DWC |

At Your Service: Calculating Length of Service

One of the most fundamental requirements in managing a qualified retirement plan is counting an employee’s length of service. It is the basis for determining such items as plan eligibility, ...
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DWC |

Employee Benefit Plan Record Retention

Employee Benefit Plan Record Retention
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DWC |

Historic DOL Enforcement Results

The Employee Benefits Security Administration (EBSA) is the division of the Department of Labor (DOL) that is responsible for ensuring the integrity of the private, employment-based benefit system. ...
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DWC |

How To Handle Mergers and Acquisitions the Right Way

Congratulations! You’re buying (or selling) a company! Call your lawyer; call your accountant; call your…third party administrator? With all the hullabaloo surrounding this kind of transaction, the ...
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DWC |

Fiduciary Duties & Due Diligence

Understanding what it means to be a retirement plan fiduciary is simultaneously very simple and quite complex. An attorney we know gave this very simple explanation about how plan fiduciaries should ...
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DWC |

Compensation Jeopardy: Things You Might Not Know About Your Retirement Plan

According to the IRS, using incorrect compensation amounts to calculate retirement plan benefits and conduct annual compliance testing is one of the most common errors they see. How can such a ...
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DWC |

Employee or Independent Contractor: a Rose by Any Other Name

USA Today recently ran an article describing how many companies are using alternative work arrangements to adapt to an ever-changing business environment. Some may rely on more part-time workers, ...
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DWC |

Don’t Let the QDRO Be Worse Than the Marriage

Very few employers have any desire to get caught in the middle of the divorce proceedings of their employees; however, when company retirement benefits become part of the negotiations, unsuspecting ...
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DWC |

Corporate Structure and M&A

Retirement plans such as 401(k), 403(b) and defined benefit plans are employer-sponsored arrangements in that employers sponsor them for the benefit of their employees. That means it is important to ...
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DWC |

401(k) or 403(b) : Tomāto, Tomäto?

The last few years have brought significant changes to the 403(b) world. The IRS' first update to the regulations in more than 40 years directly imposed new plan document and oversight requirements, ...
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DWC |

Beneficiary Designations: Family Feuding About Benefits

Thousands of plan sponsors surveyed … the top two answers are on the board. Name two sensitive subjects you would prefer to avoid getting stuck in the middle of with your employees. Ready, go!
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DWC |

Nondiscrimination Testing: ADP & ACP Tests

The actual deferral percentage (ADP) and actual contribution percentage (ACP) tests are two of several nondiscrimination tests a plan must satisfy in order to remain compliant with IRS rules. Some of ...
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DWC |

Qualified Plan Compliance

Much of what is written the press about retirement plans focuses on the responsibilities of plan fiduciaries when it comes to fees and investments. Although very important, complying with all the IRS ...
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DWC |

Related Companies: Affiliated Service Group FAQs

It seems that businesses of all sizes are more frequently being structured using multiple companies and/or that business owners are acquiring interests in other companies. With the implementation of ...
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DWC |

Voluntary Plan Document Amendments & Restatements

One of the foundational rules of retirement plans is that they must be operated in strict accordance with the terms of the written plan document. Both the IRS and the courts adhere to this rule. The ...
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DWC |

Consequences of Using an Off-Calendar Plan Year

Just like a company, a retirement plan is required to operate on a set 12-month period. This is often referred to as the tax year or fiscal year for a business and a plan year for a retirement plan. ...
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DWC |

Mandatory Plan Document Amendments & Restatements

From time to time, all qualified retirement plans are required to be updated to reflect recent legislative and/or regulatory changes. Some of these updates are made through plan amendments, but ...
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DWC |

Sometimes SIMPLE Isn't

One of the most frequent phone calls we receive — whether from a small business owner or an advisor working with one — starts something like this: "I [or my client] want to set up a retirement plan, ...
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DWC |

Meet the MEPs: Breaking Down the Regulations

Multiple employer plans have a long and convoluted past (one that began well before the infamous DOL Advisory Opinion 2012-04A). In July 2019 the Department of Labor finally published its much ...
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DWC |

Rehires and Retirement Plans: It’s Déjà Vu All Over Again

Sooner or later, most companies will have an employee who leaves and comes back again. As is so often the case, the retirement plan rules related to rehires are quite different than those that apply ...
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DWC |

Download the Plan Design Quick Reference Chart

Which retirement plan design is right for you? With so many design options it can be difficult to keep them all straight. We've taken all the guess work out of it with our Plan Design Comparison ...
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DWC |

MEPs: Dialing Down the Noise | Get the Webinar on Demand

We're setting the record straight on Multiple Employer Plans (MEPs)
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DWC |

Rules for Mandatory Cash-Outs

There are several important reasons to be aware of former employees with remaining balances in the plan.
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DWC |

Lost Participants: I Ain't Missing You at All!

Nope, this isn’t an article about bad pop songs from the 1980s, but it is about something that can be just as much of a bother – lost participants with remaining balances in your retirement plan. ...
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DWC |

Distributions from a Retirement Plan

Ask just about any service provider who works with retirement plans what their most frequently asked questions are, and they will likely tell you that they all relate to how and when participants can ...
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DWC |

Significant or Insignificant, That is the Question

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DWC |

Download the Significance of Failure Calculator

What does "significant" mean really? In order to be eligible to correct an operational error under the Employee Plans Compliance Resolution System's ("EPCRS") self-correction program one of the first ...
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DWC |

Who Are Highly Compensated & Key Employees?

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Haden McDonald |

Trust But Verify...But Not For Hardship Distributions

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DWC |

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 ...
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DWC |

Will Moving My Company Ownership Into a Trust Impact Our 401(K) Plan?

Facts I’ve been working with my personal attorney and financial advisor on some estate planning. and one item I’m considering is placing some of my assets, including my company ownership, in a trust. ...
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DWC |

Can I Convert a Coronavirus-Related Distribution to a Roth IRA?

Facts We added Coronavirus-Related Distributions (CRDs) to our 401(k) plan in 2020, and a number of our participants availed themselves of the new feature. I know they have the option to pay any ...
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DWC |

MEP, PEP, or Stand Alone Plan, Which Is the Best Fit for Your Company?

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DWC |

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 ...
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DWC |

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 ...
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DWC |

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, ...
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DWC |

Does Counting Hours of Service for Plan Eligibility Have to be a Nightmare?

Facts We’ve been following along with the last few Questions of the Week and think we’re pretty comfortable with how we want to set up eligibility for our 401(k) plan. We’re definitely looking to ...
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DWC |

What's the Simplest Way to Set Up a One Year Eligibility Waiting Period for our 401(k)?

Facts We are looking to set up a 401(k) plan for our company. Our workforce includes both hourly and salaried employees as well as full-time, part-time, and seasonal workers. For now, we really want ...
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DWC |

How Can We Tweak Our Plan's Eligibility Requirements to Make Administration Easier?

Facts We’ve sponsored our 401(k) plan for several years now, and it’s been very well-received by our employees. Believe it or not, though, one of the biggest challenges we have had is around when ...
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DWC |

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 ...
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DWC |

Can a Former Employee Roll a Coronavirus-Related Distribution Back into our Plan?

Facts Earlier this year, we decided to make the CARES Act coronavirus-related distributions (CRDs) available to participant in our 401(k) plan. We know that it is possible for participants to repay ...
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DWC |

Is There an "Easy Button" for Setting Up a New Retirement Plan?

Facts As a small business owner, I’m constantly looking for cost-effective ways to improve the benefits I offer my employees. My industry is a competitive one, and it’s important to me to have a ...
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DWC |

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, ...
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DWC |

How Can I Minimize my Risk When Reviewing and Approving Hardship Withdrawals?

Facts As a plan sponsor, I want my employees to have access to their retirement accounts in the event of a financial emergency. I know that offering hardship withdrawals could satisfy that goal, but ...
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DWC |

Which Common Plan Fees Can (and Should) We Pay from Plan Assets?

Facts We are reviewing our company expense budget to identify any that we can eliminate or reduce. We’ve read that it is possible to pay expenses related to maintaining company retirement plans out ...
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DWC |

What Are My Options (and Deadlines) for Implementing a Retirement Plan This Year?

Facts We’ve been debating implementing a 401(k) plan for 2020. After much back and forth, we’ve decided its “a go!” for this year. Since we are still in a more relaxed summer vacation mode, we’d like ...
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DWC |

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 ...
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DWC |

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 ...
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DWC |

Must I Complete the Upcoming Mandatory Plan Document Restatement Before Terminating My Plan?

Facts I currently sponsor a 401(k) plan for my employees. As I start to consider retirement myself and eventual dissolution of the business, I’m compiling a list of all the things I need to do to ...
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DWC |

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 ...
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DWC |

Do We Have to Provide New Paperwork When a Participant Requests a Second Distribution?

Facts When a participant requests a distribution from our plan, I provide them with a with a package that includes an election form and a bunch of other information. A participant who terminated and ...
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DWC |

Who Signs Our Form 5500?

Facts The person in our office who handles many of our administrative functions, including those related to our 401(k) plan, will be retiring soon, so we’re reviewing many of our internal processes ...
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DWC |

Should We Make Up for Earnings Lost as a Result of a Delayed Distribution?

Facts Over the past several months, our turnaround times for normal business processes have lagged somewhat as we have adjusted operations in response to the various stay-at-home orders. When ...
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DWC |

How Much Fidelity Bond Coverage Are We Required to Have?

Facts We are in the process of reviewing all our various business insurance policies to determine which ones we need to keep, update, or eliminate. One the coverages on our review list is the ...
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DWC |

What Retirement Plan Filings and Records Must We Keep?

Facts We’ve sponsored a 401(k) plan since 2002 and the amount of paperwork and related records we’ve accumulated is incredible. Cleaning up these records has always been on my to-do list for a while, ...
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DWC |

Can We Pay Plan-Related Expenses Out of Plan Assets?

Facts Like many businesses, we’ve been watching our cash flow carefully over the past several weeks. We’re making adjustments where necessary so that we can stay on top of the invoices we receive ...
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DWC |

Should We Include Government-Mandated Coronavirus PTO When Calculating Company Contributions?

Facts We have several employees who have had to take time off from work either because of a loss of childcare or to care for affected family members due to the coronavirus. As a result of recent ...
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DWC |

When the Grass Isn't Greener with More Plans, There's a Fix for That!

In our last Correction of the Quarter, we looked at related companies setting up different types of plans for their respective employees and noted that this sort of structure isn’t “necessarily” a ...
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DWC |

We Can't Find our Signed Plan Document, Now What?

Facts We have a new TPA for our 401(k) plan and they’ve asked for our current plan document that was effective January 1, 2017. We know the document was signed back when it was prepared, but we can’t ...
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DWC |

Do We Need to Continue Paying RMDs for a Deceased Participant?

Facts The CEO (and 5% owner) of our company passed away earlier this year at the age of 73. He started taking his required minimum distributions right on time after reaching age 70 ½. At the time of ...
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DWC |

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 ...
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DWC |

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 ...
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DWC |

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.
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DWC |

Plan Corrections

The rules that govern retirement plans are voluminous and complex. The Pension Protection Act, passed in 2006, is just one of many laws that applies, and it is over 1,000 pages long. The Department ...
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DWC |

Do the Rules About Related Companies Apply to Non-Profits with No Owners?

Facts I work for a non-profit organization that is thinking of setting up a retirement plan. One of the service providers who we’ve spoken to about this said something about determining whether we ...
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DWC |

What is a Suspense Account and Can We Use Our Forfeiture Account Instead?

Facts The annual compliance report that our TPA provided to us indicates that we over-funded matching contributions for certain employees and instructs us to transfer the excess amounts out of the ...
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DWC |

When More (Plans) Isn't Merrier: We've Got a Fix for That!

Stop us if you’ve heard this one before – a SEP, a SIMPLE, and a 401(k) walk into a bar…unfortunately, there’s not a great punch line at the end of this one. Instead of some good laughs, this ...
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DWC |

Are Rehires Immediately Eligible for our 401(k) Plan?

Facts We just rehired an employee that used to work for us but who terminated almost 4 years ago. She was eligible for our 401(k) plan during her previous tenure but took a distribution of her ...
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DWC |

What Do You Do with the SIMPLE IRA Sponsored by the Company You Just Acquired?

Facts My company recently acquired another firm. As we work to combine all of our operations, we’ve discovered a few differences in our employee benefits, specifically our retirement plans. While ...
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DWC |

Is It Possible to Avoid an Audit for the First (Short) Year of Our Plan?

Facts Our company has about 200 employees, and we launched a new 401(k) plan on October of last year. We were eager for all of our existing employees to get excited about this new benefit, so we ...
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DWC |

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 ...
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DWC |

Uncashed Distribution Checks? The IRS Provides New Guidance...Sort Of

Just about anyone who has dealt with a 401(k) plan – either as a plan sponsor or a service provider – for any amount of time has had to deal with the issue of participants not timely cashing plan ...
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DWC |

What is the Deadline to Implement a Retirement Plan for the Current Year?

UPDATE | This QOTW has been updated to reflect changes included in the SECURE Act, signed into law on December 20, 2019. The updated article is available here. Facts Returning from sunny days at the ...
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DWC |

How Does a Participant's Divorce Affect our 401(k) Plan?

Facts One of the participants in our 401(k) plan is going through a divorce, and we just received a court order directing us to provide a portion of his account to his ex-spouse. I thought that ...
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DWC |

Which Comes First: The Contribution or the K-1?

Facts As a self-employed individual, I run a successful business and have set up a retirement plan to provide for tax-sheltered savings. When its time to determine the contribution amount each year, ...
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DWC |

Spouse or Not a Spouse? That is the Question...of the Week

Facts Our company has sponsored a 401(k) plan for a while and although it’s not new to us that certain situations - from beneficiary designations to annual nondiscrimination testing - might require ...
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DWC |

What Does Safe Harbor Mean, Exactly?

Facts When we set up our new 401(k) plan last year, we decided not to add a safe harbor provision because we were not in a position to commit to the required contribution. Then we heard our TPA say ...
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DWC |

Which Compensation Do You Use When Your Company Fiscal Year is Different Than Your Plan Year?

Facts When we set up our 401(k) plan, our partnership operated on a fiscal year that ran from July 1st to June 30th. We set the 401(k) plan year to line up with our company’s fiscal year. We recently ...
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DWC |

Are We Required to Force Former Employees to Take Their Money Out of Our Plan?

Facts We just received our year end testing and it mentioned that we have several terminated participants with small balances that we are required to distribute from the plan. I remember seeing ...
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DWC |

Who are Leased Employees & Are They Eligible for my 401(k) Plan?

Facts I own a small manufacturing company that specializes in office supplies, and I sponsor a 401(k) plan for my employees. One of my former employees, Tim Halpert, worked full-time with me for the ...
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DWC |

What is the Form 8955-SSA and What Does It Do?

Facts Our company has been very fortunate to have low turnover over the years. Those that have left either were not eligible for our 401(k) plan, or they had very small balances and had their ...
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DWC |

How (and for How Long) Can I Extend the Deadline to File our Form 5500?

Facts We’ve had our retirement plan for a couple of years now and feel that we are finally getting the hang of the various deadlines for our plan. There is just one deadline that I always have ...
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DWC |

What Common Compliance Issues Should We Be Watching For?

Facts Our company sponsors a 401(k) plan, and we want to make sure we do everything correctly. We have a great staff and have put processes in place to help ensure we operate the plan in a compliant ...
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DWC |

Can Employees from a Former Subsidiary Take a Distribution from our 401k Plan?

Facts Our company has several wholly-owned subsidiaries, and each of them has signed onto our 401(k) plan as participating employers. We sold 100% of the stock of one of those subsidiaries – Glen’s ...
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DWC |

Plan Loans & Past Participants: What Happens to a Participant's Loan Balance When They Terminate Employment?

Facts We have a participant who took a loan from his 401(k) account at the beginning of the year. Yesterday, he gave us notice of his resignation, effective in two weeks, but he still has an ...
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DWC |

Forfeiture Account Gathering Dust? We’ve got a fix for that!

With all the responsibilities that come with being a plan sponsor, not to mention a business owner, your plan’s forfeiture account probably doesn’t make it anywhere near the top of the priority list. ...
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DWC |

Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 3 of 3: The Results

Facts In last week’s QOTW, you provided some tools we could use to identify which participants were affected by our decision to close one of our locations, and to calculate our actual turnover rate ...
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DWC |

Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 2 of 3: Doing the Math

Facts Last week, we asked whether the turnover we are expecting as a result of closing a facility would have any impact on our 401(k) plan, and you mentioned a partial plan termination. We have some ...
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DWC |

Can Higher Than Normal Turnover Affect my 401(k) Plan? | Part 1 of 3: Overview

Facts Our company designs and manufactures boats. Due to some advancements in technology, we will be closing one of our older facilities. While we offered those workers the option to relocate to one ...
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DWC |

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 ...
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DWC |

Can We Change our Plan's Vesting Schedule?

Facts We set up our company 401(k) plan soon after we started the business. At the time, being able to afford to make a match or profit sharing contribution seemed so distant as to not be worth ...
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DWC |

Forgot to (Timely) Execute a Document Restatement? There's a Fix for That!

You probably know that establishing a qualified retirement plan requires the formal adoption of a written, legal plan document. And, if you’ve had a plan in place for any amount of time, you’ve most ...
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DWC |

Hardships & Hurricanes: What are the Hardship Rules Following a Natural Disaster?

Facts Our company sponsors a 401(k) plan. One of our participants lives in the Florida panhandle and lost her home in Hurricane Michael. She is under age 59 ½ and is not eligible to take in-service ...
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DWC |

Are RMDs Required for a Retiree Turned Independent Contractor?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Can We Suspend RMDs for a Rehire?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Can a Participant Get a Jump on RMDs & Start Taking Them a Few Months Early?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

What Costs can be Covered Under a Hardship Distribution for Purchase of a Primary Residence?

Facts One of the participants in our 401(k) plan submitted a request for a hardship distribution for the purchase of a primary residence. On review of the supporting documentation, we discovered that ...
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DWC |

Retirement Plan Design

Introduction Whether you are starting a new plan or reviewing your current plan design, the key to success is access to knowledge for selecting the best plan.
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DWC |

Can In-Service Distributions be Taken Prior to Age 59 1/2?

Facts One of the participants in our 401(k) plan heard from a friend that it is possible to take money out of a plan while still employed. I’ve always heard that age 59 ½ is the rule of thumb as to ...
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DWC |

Plan Sponsor Requirements

Any company that sponsors a retirement plan for its employees has a responsibility to operate the plan properly, to follow a prudent process in making plan-related decisions (and monitoring those ...
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DWC |

Can Participants Invest Their 401(k) Accounts in Real Estate?

Facts I am the 100% owner of my company, and we have a 401(k) plan that allows all our employees to direct the investment of their own accounts from a menu of mutual fund options via our ...
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DWC |

Can We Change our 401(k) Plan Eligibility Requirements to Exclude Employees Who Have Already Joined?

Facts Our company has quite a few employees who only work a few hours each week. When we setup the 401(k) plan, we wanted to allow all our employees to save, so we set the eligibility requirement at ...
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DWC |

10 Common Retirement Plan Compliance Failures Found by the IRS

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.
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DWC |

Can a Charitable Organization be Named as a Plan Beneficiary?

Facts Our company sponsors both a 401(k) plan and a cash balance plan. One of our employees is a strong supporter of a local charity. She does not have a spouse or children, so she would like to name ...
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DWC |

Decoding the Alphabet Soup: What's With All the Acronyms? | Part 3

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.
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DWC |

No Beneficiary Form: Now What?

Facts A participant in our 401(k) plan recently passed away. His daughter is the executor of his estate and has asked about the process for getting his plan account paid out. We’ve gone through all ...
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DWC |

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.
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DWC |

What Do We Do With Mutual Fund Settlement Proceeds?

Facts Our company sponsors a 401(k) plan, and we moved to a new recordkeeper about two years ago. Last week we received a letter and a check from our previous recordkeeper indicating that the check ...
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DWC |

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.
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DWC |

An Employee Joined the Plan Too Soon:  No Harm, No Foul or Failure In Need of a Fix?

Facts In order to be eligible for our company’s 401(k) plan, employees must have worked for us for at least a year and be a minimum of 21 years old. They can join the plan on the next January 1st or ...
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DWC |

Here's What Happens to Your 401(k) After a Company Merger or Acquisition

Corporate mergers and acquisitions can be stressful. When employees hear that their company is part of such a deal, they instinctively worry about their jobs. Even with reassurances that there's no ...
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DWC |

What Compensation Should We Use to Calculate Company Contributions to our 401(k) Plan?

Facts Our company has a safe harbor 401(k) plan. In addition to employees making deferrals, we make a company contribution equal to 3% of each person’s compensation. We deposit both types of ...
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DWC |

Can We Exclude Seasonal Employees From Our 401(k) Plan?

Facts Our company’s workload fluctuates throughout the year with big spikes during the summer. As a result, we often hire seasonal workers who help us out during the busy times, but do not work ...
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DWC |

Can a Company Freeze a 401(K) Account if an Employee Is Suspected of Stealing From the Company?

Facts We just discovered that one of our employees has been stealing money from the company for quite some time. We fired him as soon as we discovered the theft, and we are working with the police ...
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DWC |

401(k) Notice Distribution: Hard Copy vs. Electronic Delivery

Facts It seems like 401(k) plans require a lot of different notices and disclosures be provided to participants each year. We have safe harbor and default investment notices at the end of the year, ...
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DWC |

Is it Possible for a 401(k) Beneficiary to Waive Benefits?

Facts One of our employees who was a participant in our 401(k) plan recently passed away. He never submitted a beneficiary designation form; however, since he was married, we understand that his ...
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DWC |

What Is The Difference Between Fiduciary Liability Insurance and a Fidelity Bond?

Facts My company sponsors a 401(k) plan. With everything that has been in the news about retirement plan fiduciaries and some of the lawsuits against them, we are trying to decide whether or not we ...
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DWC |

When Must Participants Get Their Spouses To Sign-off On Changing 401(k) Elections?

Facts One of our employees recently asked about changing his primary beneficiary on his 401(k) account. The beneficiary form says the participant must obtain the consent of his spouse in order to ...
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DWC |

What Are The Different Types of 401(k) Contributions And How Do They Work?

Facts Our business is considering setting up a 401(k) plan for our employees. We know that it can include both employee contributions and company contributions, but we keep hearing about all sorts of ...
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DWC |

Which 401(k) Plan Fees Can Be Paid Out of Plan Assets?

Facts When we first established our 401(k) plan, the company didn’t have a lot of discretionary income, so we went with a low-cost provider and set it up so the plan would pay for its own fees. We ...
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DWC |

Can Bonuses Be Excluded From Retirement Plan Compensation?

Facts Our company pays a number of different types of bonuses—signing bonuses, spot bonuses, holiday bonuses, production bonuses, etc. You get the idea. We know that bonuses paid once the employee ...
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DWC |

The Better Retirement Plan for Small Business: SEP or 401(k)?

Facts I am self-employed, and my company does not have any employees. Occasionally, my spouse will help out with various projects but does not work for the company full time. It is likely that I will ...
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DWC |

Can We Exclude Seasonal Employees From Our 401(k) Plan?

Facts Our company has a retail store that sells items like patio furniture, swimming pool supplies, and equipment. We also have a department that cleans and services swimming pools. The service ...
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Adam C. Pozek |

Hardship Distributions Will Soon Be Less of a Hardship

In the wee hours of this morning, Congress passed a spending bill to end the most recent government shutdown that had just begun at midnight. Although the bill was focused on funding the government ...
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DWC |

Should We Split Our 401(k) Plan to Avoid the Annual Audit?

Facts Our company has been growing over the last couple of years, which is a good thing. However, after seeing your last two Questions of the Week (here and here), I am concerned about the need to ...
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DWC |

When Does My Plan Need An Outside Audit?

Facts We are a small business that has been growing quite a bit in the last couple of years and are now up to about 100 employees. Our company has a 401(k) plan and most of the employees who are ...
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DWC |

How Should a Plan Sponsor Handle Required Minimum Distributions For Missing or Nonresponsive Participants?

Facts One of our employees retired on July 31, 2017 at age 73. During her tenure with the company she was an active participant in the 401(k) plan, accumulating a balance while having never taken a ...
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DWC |

Can I Keep My Retirement Plan After I Sell My Business?

Facts I recently sold my business, and all of my employees went to work for the buyer. My goal is to continue working for a period of time, but I do not expect to hire any more employees.
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DWC |

How Do We Report a Plan Merger on Form 5500?

Facts Our company sponsors two separate 401(k) plans, each of which covers a different group of our employees. Due to some internal changes, we now want to merge those plans so that we only have a ...
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DWC |

What Are 401(k) Plan Forfeitures and How Can They Be Used?

Facts 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 ...
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DWC |

Who Must Receive Retirement Plan Blackout Notices?

Facts We have selected a new recordkeeper for our 401(k) plan. We are told that there will be a period of eight business days when our participants are not able to log in and manage their accounts. ...
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DWC |

Retirement Plan Termination: Are There Special Rules for Paying Out Account Balances?

Facts 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 ...
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DWC |

Is There a Specific Format or Required Content for a Beneficiary Designation Form?

Facts 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 ...
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DWC |

Should We Deny a 401(k) Loan Based on an Expectation of an Employee’s Termination?

Facts One of the participants in our 401(k) plan just applied for a loan for $25,000. He has enough in his account to support the loan, but there is a bit of a wrinkle. We are planning to reorganize ...
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DWC |

Can a Company Owner Withdraw More than the Required Minimum Distribution After Age 70 1/2?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Do 401(k) Plan Eligibility Rules Apply to Part-Time Employees?

Facts 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, ...
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DWC |

Do We Need an IRS Favorable Determination Letter for Former Employees to Roll Over Their Balances?

Facts We recently processed a rollover from our 401(k) plan for a former employee who wants to roll her balance into her new employer’s plan. Shortly after the payment was processed, the former ...
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DWC |

Can We Split QDRO Fees Between Participant and Ex-Spouse?

Facts We have a participant who is going through a divorce and told us that he will be submitting a Qualified Domestic Relations Order to assign a portion of his 401(k) account to his ex-spouse. It ...
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DWC |

Can I Add a Personal SEP IRA to My Company's 401(k) Plan?

Facts Our firm sponsors a 401(k) plan that includes a 3% of pay safe harbor contribution. The plan also includes a profit sharing provision, but the only company contribution we usually make is the ...
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DWC |

Form 5330 FAQs

What is form 5330? The Form 5330 has one job – to accompany remittances of certain excise taxes that are associated with qualified retirement plans and 403(b) plans.
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DWC |

Related Companies: Controlled Groups FAQs

It seems that businesses of all sizes are more frequently being structured using multiple companies and/or that business owners are acquiring interests in other companies. With the implementation of ...
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DWC |

Plan Eligibility

Companies that sponsor retirement plans have a great deal of flexibility in determining who is eligible for those plans. However, since plans are always required to follow the terms outlined in their ...
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DWC |

Nondiscrimination Testing: Compensation Ratio Test

The compensation ratio test is one of several nondiscrimination tests a plan must satisfy in order to remain compliant with IRS rules. The term “compensation” can seem uncomplicated; however, when we ...
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DWC |

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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DWC |

Nondiscrimination Testing: Top Heavy Determination

The top heavy determination is one of the nondiscrimination tests required by the IRS to ensure plans do not disproportionately favor certain owners and officers.
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DWC |

Nondiscrimination Testing: Minimum Coverage Test

The minimum coverage test is one of several nondiscrimination tests a plan must satisfy in order to remain compliant with IRS rules. There are two versions of the test: the ratio percentage test and ...
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DWC |

Compliance Deadlines for Calendar Year Plans

January 31 | Forms 1099-R to the Participants The custodian/directed trustee of the plan generally delivers the 1099-Rs directly to the participants. Note that some custodians deliver the 1099-R ...
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DWC |

Form 8955-SSA FAQs

What information is required to be reported on the Form 8955-SSA? The form requires the plan sponsor to report any participant who terminated in a prior year and is still due a vested benefit from ...
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DWC |

ERISA Fidelity Bonds FAQs

What is a fidelity bond? Also known as a surety bond, a fidelity bond is a special type of insurance that protects a company-sponsored retirement plan from losses due to misuse or misappropriation of ...
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DWC |

Plan Corrections: When Bad Things Happen to Good Plans

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DWC |

Form 5500 FAQs

The Form 5500 is an information return that is filed, usually with the Department of Labor, each year to provide certain details about the operations and financial status of an employee benefit plan. ...
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DWC |

Hardship Distributions

Plan sponsors have the option to allow participants to access their accounts while still employed via a plan loan or an in-service distribution. However, some companies prefer to limit that access so ...
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Adam C. Pozek |

What's Old Is New Again

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 ...
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Adam C. Pozek |

SchoolHouse Rock Meets The 401(k) Plan

When I was kid, I used to love Schoolhouse Rock during the commercial breaks of Saturday morning cartoons. Even now, I have them all on DVD as well as a CD of covers by various rock musicians, and I ...
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Adam C. Pozek |

Accidents Will Happen

If you’ve spent any time working with retirement plans, you know how complicated they can be. It seems like every rule has an exception and an exception to that exception. It is no wonder that ...
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Adam C. Pozek |

Mark Twain, Elves and Real Estate in 401(k) Plans | Part 2

In Part 1 of this post, I discussed some of the DOL rules that can make real estate not all it’s cracked up to be as a 401(k) investment. Here in Part 2, we will take look at some IRS wrenches that ...
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Adam C. Pozek |

Mark Twain, Elves and Real Estate in 401(k) Plans | Part 1

“Real estate doesn't interest me. It's no doubt a great flaw in my personality, but I can't think in terms of boundaries. Those imaginary lines are as unreal to me as elves and pixies.” -- Kurt ...
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Adam C. Pozek |

Your Tax-Exempt Status Has Just Been Revoked!

It’s funny how the human brain (or maybe it’s just my brain) forms associations with words or phrases. Whenever I hear the word “revoked,” I immediately think of a scene from one of the Lethal Weapon ...
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Adam C. Pozek |

Are You Kidding? The Fall Will Probably Kill You!

My good friend and benefits attorney Ilene Ferenczy sends out an e-newsletter from time-to-time. The Ferenczy Flash always includes timely, practical information for plan sponsors and service ...
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Adam C. Pozek |

Werewolves of Pension

I was recently asked to write an article on ERISA Section 404(c). As I contemplated how to approach the article, I recalled many situations in which I have heard 404(c) pitched as the mythical silver ...
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Adam C. Pozek |

Reasonableness Requirement Is Not New

An article appeared yesterday on CFO.com entitled “New 401(k) Obligations Heaped on CFOs” and it carried a tagline stating “New disclosure rules abound, but pay close attention or you could be sued ...
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Adam C. Pozek |

Easy Peasy Lemon Squeezy…Not When It Comes To Retirement Plans

Qualified plans are complicated beasts regardless of size or design. This truth is sometimes forgotten at this time of year when sponsors and service-providers are busy dealing with nondiscrimination ...
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Adam C. Pozek |

Confession Is Good For The Soul…And The Checkbook

Over the last few weeks, I have spoken with at least four plan sponsors who just became aware that they missed the April 30, 2010 deadline to restate their plan documents for EGTRRA. For those in ...
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