Topic Archive: Question of the Week

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

DWC | 01/21/20

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 resolutions, my CPA reminds me once again of all the tax benefits, personal and corporate, that a qualified retirement plan can offer.  Finding incentive for my 2020 resolutions, I’m reminded that my inaction in 2019 has limited my options for tax savings tools as the 2019 returns are prepared.

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

DWC | 01/14/20

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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What is the Simplest Way to Add Automatic Enrollment to our Plan?

DWC | 01/7/20

Facts

We are considering adding automatic enrollment to our 401(k) plan.  We’ve read some of the other posts on your website about EACAs and QACAs, but that all seems like a lot of extra complexity that we don’t really need.  We’re really just looking for the basics; we want employees who don’t take any action to be automatically in rather than automatically out.  That’s it.

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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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Do 401(k) Loans Impact a Participant's Credit Score?

DWC | 12/10/19

Facts

Our 401(k) plan allows participants to take loans from their accounts.  We have a written policy that describes how the loans work and spells out the requirements that the plan and participants must follow.  Among other details, the loan policy indicates that payments must be made via payroll deduction.

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

DWC | 12/3/19

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 affected participants’ accounts and into a plan suspense account.  The only problem is that I am not sure what a suspense account is.  When I spoke to our recordkeeper, they said we have a forfeiture account but not a suspense account.

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Tradition vs. Taste: What Classic Thanksgiving Dish Do You Secretly Dislike?

DWC | 11/26/19

Facts

Every year we gather with family and friends to stuff ourselves silly in honor of the first harvest here in the New World. Since that time, families have perfected and passed down Turkey Day recipes that have become staples on the dinner table. 

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

DWC | 11/19/19

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 account shortly after she left.

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What is a Short Plan Year and What Does It Mean for My Deferrals?

DWC | 11/12/19

Facts

Our company operates on a calendar tax year, but our 401(k) plan runs on a fiscal year ending each June 30th.  It is a real hassle to manage two different year-ends, so we asked our TPA about aligning the two.  They said we could amend the plan to make that happen, but there is also something about it creating a short year which would require us to go through year-end compliance testing twice during the transition.

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

DWC | 11/5/19

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 we’ve sponsored a 401(k) plan for several years, the company we bought has a SIMPLE IRA.  I’ve done a little research and found that when a company offers a SIMPLE, it cannot also sponsor any other types of plans.

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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.