The Basics of New Comparability Plans
November 14, 2024
New comparability plans are qualified defined contribution plans that allow an employer to allocate different profit-sharing contribution percentages to different groups of employees at the employer’s discretion. These plans are subject to complicated discrimination tests that take into account the equivalent benefit at retirement of the current contribution allocated to each participant. Specifically, new comparability … Continued
The Rules of Engagement for Correcting Inadvertent Benefit Overpayments, or Not!
November 12, 2024
October 15th: The Gift that Keeps on Giving… As if we didn’t have enough to celebrate on October 15th, the final deadline to attach our financial statement audits to calendar year Form 5500 filings, the IRS issued Notice 2024-77 to provide welcome guidance on inadvertent overpayments. Oops! I Did It Again, I Paid You Too … Continued
IRS Announces Increases on Benefits and Contributions Dollar Limitations for 2025
November 06, 2024
The Internal Revenue Service has announced adjustments on the limitations affecting retirement plans. In particular, participants can now elect to defer up to $23,500 to 401(k), 403(b), and 457(b) Plans in 2025 compared to $23,000 in 2024. Below is a chart that outlines updated employee benefit plan limits: PLAN LIMITS RETIREMENT & SOCIAL SECURITY … Continued
403(b) Specific Financial Statement Audit Considerations
October 29, 2024
Updated October 29, 2024 Every Independent Qualified Public Accountant (IQPA)’s retirement plan audit is different. There are countless iterations of service providers, plan formulas, payroll companies, investment philosophies, and internal control setups that must be considered when designing an audit plan. There are many audit considerations that are specific 403(b) plans that plan auditors must … Continued
How to Compute the 15-Year Special Catch-Up for 403(b) Plans
October 15, 2024
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 Trouble with True-ups: Make Sure You Budget for the Maximum Match
October 07, 2024
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
Some “Good Deeds” Do Go Unpunished: Ineligible Hardship Distributions in 401(k) Plans
October 01, 2024
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 Approvals – The Bleeding Heart
September 24, 2024
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
Catch-Up Contributions Must Exceed Some Limit
August 21, 2024
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
All Plans Are Not Created Equal
August 16, 2024
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