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How Much Fidelity Bond Coverage Are We Required to Have?

DWC 05/12/20
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 fidelity bond for our 401(k) plan.  Although our plan does invest some in regular mutual funds (about $200,000), the plan also holds some non-traditional ...
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What Retirement Plan Filings and Records Must We Keep?

DWC 05/5/20
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, but it’s not the most exciting task.  As much as I would like to I know I can’t just throw it all away, but it seems like the mountains of old ...
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Can We Pay Plan-Related Expenses Out of Plan Assets?

DWC 04/28/20
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 from our service providers.  Among those invoices are a few related to expenses for our 401(k) plan.  I think I’ve heard that I can pay those invoices ...
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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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Do the Rules About Related Companies Apply to Non-Profits with No Owners?

DWC 12/17/19
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 are related to any other businesses through over-lapping ownership.
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Are We Required to Make Safe Harbor Contributions for HCEs?

DWC 10/22/19
Facts My company sponsors a safe harbor 401(k) plan so that all of the highly compensated employees can maximize their deferrals without worrying about failing the ADP test each year.  Although we fully intend to make the same level of contribution for the HCEs that we do for the non-HCEs, we would prefer to not to be required to do so in order to ...
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Can Automatically Enrolled Participants Who Forgot to Opt Out Withdraw Their Deferrals?

DWC 10/8/19
Facts We are thinking of adding automatic enrollment to our 401(k) plan.  One of our concerns, however, is that we might end up with a bunch of tiny account balances for participants who forget to opt out until they see their first paycheck with automatic deferrals taken out.
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Is It Possible to Avoid an Audit for the First (Short) Year of Our Plan?

DWC 10/1/19
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 waived the waiting period to join so that everyone would be eligible on day one.  The good news is that it worked, and we had a lot of our employees sign ...
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What is a Successor Plan and Does It Prevent Me from Starting a New 401(k) Plan?

DWC 09/10/19
Facts My company used to sponsor a 401(k) plan for my employees.  Due to an unforeseen financial hardship, we terminated the plan two years ago.  Now that we are back on solid footing, I would like to start up another 401(k) plan.  I checked with the TPA we were working with, and they said something about a possible successor plan issue.  I’m not ...
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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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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.