Category: 401k Plans
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
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
The LTPT Rules and 403(b) Plans
August 06, 2024
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
How to Navigate Late 401(k) Deposits After Receiving Letter from Department of Labor
July 19, 2024
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
Form 5500 Participant Count: Cash or Accrual Basis? To Audit or Not to Audit?
June 25, 2024
Timing Differences Can Make a Difference The number of participants as of the beginning of the year determines whether the plan’s financial statements must be audited. Starting in 2023, eligible participants who do not have an account balance on the first day of the plan year are no longer included in the participant count used … Continued
Counting Participants in a First Year Plan
March 25, 2024
The 2023 Form 5500 Annual Return/Report of Employee Benefit Plan includes some changes to previous filing requirements as published in the Federal Register ) and documented in the 2023 Form 5500 instructions. As discussed in our previous blogs “Learning How to Count Again” and “Counting What Counts, Counts the Auditors Out!,” one change was to … Continued
The 2023 DOL Audit Quality Study: Slight Improvements, but Audit Quality is Still Concerning
March 07, 2024
The Office of the Chief Accountant (OCA) in the Employee Benefit Security Administration (EBSA) of the Department of Labor (DOL) has released a 2023 Audit Quality Study covering the quality of audits being performed by independent qualified public accountants (IQPAs). This is the fourth study to be performed with prior studies being performed in 2015, … Continued
Calculating Earnings for 401(k) and 403(b) Plan Corrections: Do Your Best to Do Better!
February 13, 2024
Not really a good option: The Online Calculator is convenient, and also inexpensive, so…use it for the HCEs! Practitioners tend to use the DOL’s online calculator for late deferral deposits, since EPCRS permits estimates, but to the extent one is being practical and making participants whole, the cheaper result of the online calculator should not … Continued
The Maximum Contribution May Be Lower Than You Thought: ADP and ACP Test Basics for 401(k) and 403(b) Plans
February 01, 2024
But It’s My Money! Business owners and Highly Compensated Employees (HCEs) are often shocked to hear that they cannot contribute the maximum 401(k) or 403(b) deferral ($23,000 and $22,500 for 2024 and 2023, respectively) because their plan did not pass the discrimination tests. Much to their surprise, through the Actual Deferral Percentage (ADP) and the … Continued