Topic Archive: Plan Compliance

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

DWC | 07/23/19

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 retirement plan accounts had special protection against legal judgments.

Read More

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

DWC | 06/25/19

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, it feels more complicated than running the business.  My CPA seems to be waiting on our TPA, and the TPA waiting on the CPA – and amidst it all, I’m just waiting on my numbers!

Read More

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

DWC | 06/18/19

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 sharing contribution too.  I’m reluctant to utilize a safe harbor design, because I really value the vesting schedule on our employer contributions to help retain my best talent, but the plan frequently fails ADP and ACP testing.

Read More

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

DWC | 06/4/19

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 us to provide information about spousal relationships, we are seeing that different types of relationships, and statuses, are becoming more commonplace.

Read More

What Does Safe Harbor Mean, Exactly?

DWC | 05/28/19

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 something about our deferral deposits fitting within the safe harbor deadline.  Now I’m just confused.

Read More

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

DWC | 05/21/19

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 changed our company’s fiscal year to follow the calendar year and didn’t think to notify our TPA to discuss the impact to the Plan.  Now, they are asking for annual census information (including compensation) in order to prepare the profit sharing allocation and complete the required testing.

Read More

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

DWC | 05/7/19

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 participants were recently required to receive corrective refunds due to contributing too much for 2018.  I thought it was because our plan was top heavy last year, but then my TPA mentioned something called an ADP test.

Read More

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

DWC | 04/16/19

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 past several years but recently left to work for a staffing agency called Prestige Worldwide.  Tim was a great employee for many years, and Prestige has offered me the opportunity to have him continue to provide services for me through the staffing agency. Prestige Worldwide also offered the services of another employee, Toby Blenderson, who would work on a part-time basis for about six months.

Read More

What is the PBGC & Does it Cover our Cash Balance Plan?

DWC | 04/9/19

Facts

Our company is thinking of setting up a cash balance plan.  In our research about what that entails, we keep running into information about the PBGC and paying premiums.

Read More

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

DWC | 04/2/19

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 accounts forced out when they terminated.  We recently did have one longer-term employee leave us.  She was an active participant in our plan and has a sizeable balance that is well above our plan’s mandatory distribution threshold.  Our TPA said that we now have to file some new form – an 8955-SSA, I think – that has something to do with this former employee.

Read More
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.