Topic Archive: Plan Compliance

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

DWC | 02/19/19

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 for purposes of  determining whether a partial plan termination has occurred.

We’ve performed the review, and our minimum turnover rate will exceed 20%. Depending on which employees accept our relocation offer, we may have even more folks who terminate during this time frame.

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

DWC | 02/12/19

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 follow-up questions.  As a quick recap, we are in the process of closing one of our manufacturing facilities.  Some of those working at that location have turned down our relocation offer and will lose their jobs as a result.  From last week’s QOTW, I know there is potential for a partial plan termination and that I will need to perform a review to make a final determination.

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

DWC | 02/5/19

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 of our other facilities, many have elected not to do so and will be terminating employment.  That group comprises roughly 20% of our total workforce.

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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 people who are highly compensated employee (HCEs), and it is causing havoc with our nondiscrimination testing.  Last year, some employees had to take corrective distributions of their deferrals due to failing the ADP test for the first time.

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What is the Deadline to Deposit our Safe Harbor Matching Contribution?

DWC | 12/4/18

Facts

Our company sponsors a safe harbor 401(k) plan that provides a matching contribution equal to 100% of the first 4% each participant defers.  I had always thought that the deadline for us to deposit the match is the due date of our company tax return (with extensions), but my TPA mentioned something about a quarterly deposit requirement.

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

DWC | 10/16/18

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 recordkeeper’s website.  The plan has been in place for a while.  Not only have total plan assets grown quite a bit, but I have personally accumulated a significant plan account for myself.  I am considering using a portion of my plan account to invest in real estate.  Most likely, I will purchase a rental condo.

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

DWC | 10/2/18

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.  The current environment of selling information for marketing use and identity theft has only intensified that.

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

DWC | 07/17/18

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 July 1st following the date they meet those requirements.  Recently, we discovered that we allowed an employee to start contributing to the plan before he met those requirements.  He also received company matching contributions.

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Can You Make Extra Payments on a 401(k) Loan to Pay It off Faster?

DWC | 05/29/18

Facts

A participant in our 401(k) plan took out a loan a couple years ago. She could only afford to make the bare minimum payments at the time, but is now in a financial position to pay down the loan more quickly.

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