401(k) Q&A | Plan & Industry Content From DWC - The 401(k) Experts

Is It Possible to Split Eligibility to Allow for Deferrals but to Postpone Safe Harbor Contributions?

DWC 10/29/19

Facts We allow new employees to join our 401(k) plan on the first of the month after they are hired. They become eligible to make deferrals and also receive the company safe harbor contribution at that time. We don’t have high turnover, but employees who leave often do so within the first year of joining us. We don’t mind allowing new hires to ...

Is There a Plan Design that Combines the Benefits of Automatic Enrollment and Safe Harbor?

DWC 10/15/19

Facts My company sponsors a 401(k) plan, and we fail the annual ADP test pretty consistently. We really want to increase participation; not only to help our test results, but also to encourage our employees to save for retirement. Automatic enrollment would help with participation, but we would have to set the default rate too high in order for it ...

What is Automatic Enrollment and How Does it Work?

DWC 09/17/19

Facts Our company sponsors a 401(k) plan, but very few of our participants are contributing. We started the plan as an added benefit to help attract and retain employees, but we also truly want to encourage our employees to save for retirement. I’ve heard a lot about something called automatic enrollment and how it can be a great tool to get ...

What is the Deadline to Implement a Retirement Plan for the Current Year?

DWC 08/13/19

UPDATE | This QOTW has been updated to reflect changes included in the SECURE Act, signed into law on December 20, 2019. The updated article is available here. Facts Returning from sunny days at the beach, I’ve begun discussing my company’s year-end financial projections with my accountant. Those conversations have been about as fun as a sunburn; ...

Is It Possible to Convert a Pre-Tax 401(k) Account to a Roth Account?

DWC 08/6/19

Facts We recently had one of the participants in our 401(k) plan ask if it is possible to convert her balance from pre-tax to Roth. She has been a participant in our plan for many years and has both her own deferrals as well as company contributions (both match and profit sharing). Based on her current financial situation, she believes it would be ...

Can We Require Employees to be Employed at Year-End to Receive a Safe Harbor Contribution?

DWC 07/30/19

Facts Our company sponsors a safe harbor 401(k) plan. Each participant receives a safe harbor nonelective contribution equal to 3% of his or her annual pay. Our TPA calculates the safe harbor contribution for us after the close of each year, and we deposit it sometime before we file our company tax return for that year. Each year, we have a couple ...

What Do We Need to Consider When Switching from a SIMPLE IRA to a 401(k)?

DWC 07/9/19

Facts We’ve sponsored a SIMPLE IRA for our employees for years and while it’s served its purpose, we are beginning to feel the limitations inherent in the plan. As we begin to grow, we’d love to be able to add provisions for eligibility and to be able to reward our key performers. I’m hesitant about making a change from this “known” commodity to a ...

Safe Harbor 401(k) Match vs. Nonelective: Two Words for the Same Thing or Two Different Options

DWC 06/11/19

QOTW - 6.11.2019 - Safe Habor 401k Match vs. Nonelective - Two Words for the Same Thing or Two Different Options - Plan Design

Facts I recently got a promotion at work, and one of my new job responsibilities is to help manage our company’s retirement plan. It is a safe harbor 401(k) plan. A number of our employees are about to become eligible for the plan, and they are asking me questions about the company matching contribution. From what I can tell, we make a ...

Are There Risks to Contributing More Than the Minimum to a Cash Balance Plan?

DWC 01/29/19

Facts I set up a cash balance plan two years ago and have put in the minimum required contribution each year. Now, in my third year, I would like to make the maximum deductible contribution, which is double the amount of the minimum.

Can We Change our Plan's Vesting Schedule?

DWC 01/8/19

Facts We set up our company 401(k) plan soon after we started the business. At the time, being able to afford to make a match or profit sharing contribution seemed so distant as to not be worth thinking about. We were so focused on the only contributions being employee deferrals that we set the vesting schedule at 100% across the board. The ...

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