The IRS published the final rule regarding participant hardship distributions from defined contribution plans. Hardships get a little easier with expanded qualification rules and streamlined review process. Some of these changes are mandatory, requiring employers to make the changes by Jan. 1, 2020, while others are optional. Though the IRS had issued the proposed regulations in 2018, the final regulations clarify a few key provisions.
Safe Harbor 401(k) Plans can eliminate a host of testing issues for traditional 401(k) Plans. If HCE contributions in your plan have resulted in corrective distributions in the past, you may consider a Safe Harbor plan in 2020. The deadline is quickly approaching, so be sure to contact us before December 1st to make 2020 plan changes.
With the future of Social Security in question, it is becoming ever increasingly important for workers to self-prepare for post-retirement living. Studies show that approximately one out of every three eligible workers choose NOT to participate in their employer-sponsored 401(k) plan.
In 2018, the 401(k) plan celebrated its 40th birthday! Though extremely popular today, 401(k) plans came about almost by accident. IRC Section 401(k) was passed into law as part of the Revenue Act of 1978 and was included to limit executive compensation. However, in 1980, Ted Benna of the Johnson Companies used the provision to create and get IRS approval of the first 401(k) plan for his company. For this he is often referred to as the father of the 401(k).
Natural disasters can cause upheaval in many aspects of victims’ lives and this destruction often extends to financial matters. What should otherwise be routine compliance for plan deadlines can prove difficult in these extreme events and the government tends to grant temporary relief in such cases.
One of the most prevalent and difficult challenges for many twenty somethings these days is the repayment of their, often substantial, student loan debt. Statistics show that the average college graduate with a bachelor’s degree left school in 2016 with $28,446 in student loan debt.
Earlier this year, the Bipartisan Budget Act of 2018 was passed by Congress and signed into law. While this law made several changes that impact retirement plans, one provision changing the rules around hardship distributions is particularly notable.
Being a plan sponsor comes with a good bit of responsibility. You’ve taken the important step of hiring a third-party administration firm to help you navigate the myriad of processes that are required to keep your plan in compliance with applicable regulations. Below are a few helpful hints to keep your plan in compliance, avoid unnecessary corrections, and help to better serve your participants.
Many American workers participate in company retirement plans, methodically contributing to their accounts over time to fund for life after work. Beyond benefiting from employer-funded plans, retirees commonly draw from additional savings tucked away in IRAs or after-tax savings accounts as well. Add Social Security payments to the mix and it should be a recipe for a secure retirement, right? While many retirees thoroughly plan for their retirement, the rising cost of living and unforeseen expenses can mean the retirement income may fall short of anticipated needs. The difference between your retirement income and actual expenses is known as your Retirement Income Gap.
If your company has decided to offer a high deductible health plan, don’t worry, you are not alone. Recent studies show that an increasing number of employers have elected to offer high deductible health plans (HDHP) either to completely replace or be offered in conjunction with a more traditional Health Maintenance Organization (HMO)plan or Preferred Provider Organization (PPO) plan. When sponsoring an HDHP, employers typically offer their employees the ability to contribute to a Health Savings Account (HSA) to help offset the increased deductible associated with the HDHP. In 2015, 24 percent of all workers were enrolled in a HDHP with an HSA savings option. This is a dramatic rise since 2009 when just 8 percent were covered under such plans.