Topic Archive: Question of the Week

Can We Allow a Distribution for a Coronavirus-Related Hardship?

DWC | 03/31/20

Facts

Some of our employees are dealing with financial challenges due to the coronavirus situation, and they are asking whether they can access their 401(k) accounts.  Our plan allows for loans and for in-service distributions at age 59 ½, but some of these employees are younger than that.  As a plan sponsor, I’ve always felt strongly that our 401(k) plan was a tool to save for retirement; however, these are unprecedented times, and I’d like to find ways to support my employees’ needs.

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How Do We Stop Our Discretionary Matching Contribution?

DWC | 03/26/20

Facts

My company sponsors a 401(k) plan that provides for a discretionary matching contribution, which we deposit each pay period along with employee deferrals.  Given the economic uncertainty, I’m focused on doing what I can to ensure adequate cash flow to maintain operations, including making payroll.  That might mean we make the decision to suspend the matching contributions.

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Can We Suspend our Safe Harbor Contribution Mid-Plan Year?

DWC | 03/24/20

Facts

Given the current uncertainty in the world economy and the unknown ongoing affects of coronavirus, I’m looking at all financial obligations for our company, and for opportunities to reduce risk.  We currently sponsor a 401(k) plan for our employees and provide a safe harbor contribution equal to 3% of employee compensation.

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How Can We Create More Flexibility in our Cash Balance Plan Contributions?

DWC | 03/17/20

Facts

We are considering adopting a new cash balance plan.  We really like the higher contribution amounts, but we keep hearing that the contributions are fairly rigid and inflexible.

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

DWC | 03/10/20

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 locate the signed copy.

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Have the Rules for Safe Harbor 401(k) Notices Changed?

DWC | 03/3/20

Facts

My company sponsors a safe harbor 401(k) plan and every year my TPA sends me a reminder to distribute a notice to participants.  It’s not the biggest hassle but I’ve wondered if it’s really necessary that this same information be provided to participants each and every year.

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Do We Still Need to Suspend Deferrals Following a Hardship Distribution?

DWC | 02/25/20

Facts

Larry and Kent are both participants in our company’s 401(k) plan.  Both recently went back to school on a part-time basis to pursue graduate degrees and will continue working for us.  Each of them took hardship distributions to help pay for tuition, Larry on September 18, 2019, and Kent on January 3, 2020.  Both of them would like to resume making contributions to the plan as soon as possible.

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

DWC | 02/18/20

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 his passing, he was not married and had no children.  He also had not designated a beneficiary under the plan.

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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 lookback year (whatever that is) so that they can determine who are our highly compensated employees.

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What New Tax Credits are Available for Adding an Automatic Enrollment Feature to our Plan?

DWC | 02/4/20

Facts

Our business currently has a retirement plan and we are considering adding automatic enrollment. We have heard that there are new tax credits available to employers who include automatic enrollment features in their plans.

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