Topic Archive: Question of the Week

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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Are RMDs Required for a Retiree Turned Independent Contractor?

DWC | 11/27/18

Facts

We have an employee who attained age 70 ½ earlier in 2018 and will retire by the end of 2018. However, she has agreed to enter into a contract to provide services to our firm and will be reclassified as an independent contractor on December 1, 2018.

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Drama or Comedy: What's Your Holiday Film Favorite?

DWC | 11/20/18

Facts

Here at DWC we're getting into the holiday spirit. We've done our grocery shopping, prepped the pies and pulled out our eating pants. There's just one thing missing. 

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Can We Suspend RMDs for a Rehire?

DWC | 11/13/18

Facts

We have a non-owner participant in our 401(k) plan who is age 74 and retired in 2014.  That means that he has already been taking required minimum distributions for the last few years. We just recently rehired him in October 2018. Now that he is re-employed he has inquired as to whether he can suspend his RMDs this year.

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Can a Participant Get a Jump on RMDs & Start Taking Them a Few Months Early?

DWC | 11/6/18

Facts

One of the non-owner participants in our 401(k) plan will be turning 70 in April of next year (2019).  That means she will reach age 70 ½ in October and will need to start taking required minimum distributions.  The participant knows her first RMD is due no later than April 1, 2020, but she has asked whether she has to wait that long to actually withdraw the money. 

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What Costs can be Covered Under a Hardship Distribution for Purchase of a Primary Residence?

DWC | 10/30/18

Facts

One of the participants in our 401(k) plan submitted a request for a hardship distribution for the purchase of a primary residence.  On review of the supporting documentation, we discovered that the purchase has already occurred and that the requested distribution is to cover the cost of renovations prior to moving in.

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Can In-Service Distributions be Taken Prior to Age 59 1/2?

DWC | 10/23/18

Facts

One of the participants in our 401(k) plan heard from a friend that it is possible to take money out of a plan while still employed.  I’ve always heard that age 59 ½ is the rule of thumb as to when in-service distributions are allowed, but this participant is only in her mid-40s.  She has about $100,000 in the plan: $65,000 in employee deferrals, $25,000 in safe harbor matching contributions, and $10,000 in profit sharing.

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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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Can We Change our 401(k) Plan Eligibility Requirements to Exclude Employees Who Have Already Joined?

DWC | 10/9/18

Facts

Our company has quite a few employees who only work a few hours each week.  When we setup the 401(k) plan, we wanted to allow all our employees to save, so we set the eligibility requirement at the first day of the month following an employee’s hire date.  Unfortunately, hardly any of our part-timers are contributing, and it has become burdensome and expensive to keep up with all the notices we have to provide each year to people who don’t even have accounts in the plan.

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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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