Art of the Qualified Plan Audit

How Does the 403(b) Special 15-Year Catch-Up Contribution Work? Where have you worked, for how long, and how much have you contributed to the 403(b) plan? These are all questions that make up the puzzle pieces necessary to compute each participant’s available 403(b) catch-up. Participants in a 403(b) plan can make an additional contribution once … Continued

The Basics of the True-Up Match Employers that give substantial bonuses tend to give their employees the opportunity to contribute the maximum 401(k) or 403(b) deferral amount out of their bonus pay. To ensure that employees who take advantage of this flexibility get the maximum match, the employers have to make sure that their plan … Continued

No Good Deed Goes Unpunished The protagonist of our previous blog, Non Safe-Harbor Hardship Approvals: Warning: Employer Discretion Could be Ill-Advised, was Mr. Bleeding Heart, an employer who wants to help employees in a financial bind at all costs, which led him to authorize several hardship distributions that were not permitted by the plan document’s … Continued

Non Safe-Harbor Hardship Approvals: Warning: Employer Discretion Could be Ill-Advised A Bleeding Heart The phrase bleeding heart is used to describe one who shows excessive sympathy for another’s misfortune. Every year, we get phone calls from clients who want to help employees out of a financial bind. This emergency is not on the list of … Continued

Background: Definition of Catch-Up Contributions Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions to their 401(k), 403(b), and governmental 457(b) plans in the amount of $7,500 in 2023 and 2024. By definition, catch-up contributions must be contributed IN ADDITION to the lesser of:   … Continued

403(b)-Specific IQPA Audit Considerations Let’s start with a little background. Code Section 403(b) came first. In 1958, Congress made available a tax deferred savings device for employees of certain section 501(c)(3) organizations by adding section 403(b) to the Internal Revenue Code. Although deferred compensation plans for municipal employers had already existed for over a decade, … Continued

Background The SECURE 2.0 Act’s LTPT rule took effect on January 1, 2023, which means that as of January 1, 2025, any employee who has worked at least 500 hours (but no more than 999 hours) annually for two consecutive years (and has reached age 21 by the end of that two-year period) must be … Continued

What’s a Year-of-Service?….What Do You Need It to Be? Pension jokes and dad jokes can be corny, predictable, and unoriginal, but the truth is, they often tell the truth. One common pension joke is that if you ask an actuary how much is 2+2, he will respond: “How much do you need it to be?” … Continued

Introduction Managing a 401(k) plan involves careful oversight and adherence to regulations set forth by the Department of Labor (DOL). One critical aspect is ensuring timely deposits of employee deferrals into their retirement accounts. However, despite best intentions, mistakes can happen, leading to late deposits. The consequences of such errors can be significant. In this … Continued

Background The DOL’s rules and regulations require the notes to audited ERISA plans’ financial statements to include an explanation of differences, if any, between the information contained in the audited financial statements and the net assets, liabilities, income, expense, and changes in net assets reported on Form 5500 Schedule H. The inconsistencies are most often … Continued