Why it can be a good idea to add an after-tax contribution option to a 401(k) or a 403(b) plan

Tip of the day

Do the following statements pertain to your 401(k) or 403(b) plan?

  • Your plan does not have a problem passing the ACP discrimination test.

  • You have  plan participants who usually reach the maximum 402(g) limits ($18,000 for under age 50 and $24,000 for age 50 and older in 2015) on their Pre-tax or Roth-elective deferral contributions, and who would like to contribute more to the plan if they could.

If the answer to the above points is yes, then you may want to consider adding an After-Tax Contribution option to the plan.

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The IRS, in Rev. Proc. 2015-28, Makes More Beneficial Correction Changes to the Employee Plans Compliance Resolution System (EPCRS)

Tip of the Day

We have more good news coming out of the IRS regarding ways to correct plan errors!  Rev. Proc. 2015-28 provides for new safe-harbor correction guidelines under EPCRS for corrections relating to employee missed deferrals and automatic enrollment missed deferrals of 401(k) and 403(b) plans.

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The DOL Allows More Time for the Distribution of Retirement Plan Participants' ERISA 404(a)(5) Annual Fee Disclosure Notice

Tip of the Day

This article provides the text of an announcement from the Department of Labor on the timing of the annual ERISA 404(a)(5) participant notice disclosure. The 404a-5 regulation requirement that annual disclosures be made at least once in any 12-month period is changed to at least once in any 14-month period.

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Do You Have Missing Participants in a Retirement Plan? And No IRS or Social Security Letter-Forwarding Program to Turn to!

Tip of the Day

Locating missing participants is a fiduciary duty.  Therefore, action must be taken to locate these participants.

FAB 2014-1, issued August 14, 2014, discusses what fiduciaries should do regarding missing participants of a terminating defined contribution plan.  We believe that even for active plans, fiduciaries should also revise their procedures to reflect the FAB.

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Failed 401(a)(4) Discrimination Test? Retroactive Corrective Contribution Plan Amendment to the Rescue!

Tip of the Day

Have you failed 401(a)(4) discrimination test no matter what you have tried? Retroactive Corrective Contribution Plan Amendment can save the day. 

Regulation Section 1.401(a)(4)-11(g) allows one to satisfy the coverage or the nondiscrimination requirements, by making a retroactive amendment to the plan to correct the failure.

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Discrimination Testing Free Passes

Tip of the Day

The general discrimination test of Sec. 410(b) does not have to be done under the following four circumstances:

1.  Plan has no includable non-highly compensated employees (NHCEs) during the year.

2.  Plan has no highly compensated employees (HCEs) benefiting during the year.

3.  Employer had a merger or acquisition during the year or previous plan year.

4.  Section 410(b) discrimination testing has been performed within the past two years (3 Year Testing Cycle rule) . . .

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