One of the questions asked by your TPA during the annual census collection may be whether your participant contributions and loan payments were transmitted within the Department of Labor (DOL) safe harbor time frame.
If you sponsor a defined contribution retirement plan, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 now requires additional information be provided to your plan participants on their quarterly account statements.
Since the passage of the Tax Reform Act of 1986, taxpayers have been required to withdraw previously untaxed dollars from their qualified plan and IRA accounts.
Historically, 401(k) plans could exclude individuals who worked less than 1,000 hours in the plan year. However, in its effort to expand access to employer retirement plans, the Setting Every Community Up for Retirement Enhancement (SECURE) Act introduced the concept of a “long-term, part-time employee” (LTPT).
Each year, those in the retirement community collect, analyze and calculate data to ensure plan compliance with the laws that govern qualified retirement plans.
The Coronavirus pandemic, without a doubt, has changed the way we do business. It has also created some unanticipated vulnerabilities. For instance, since the start of the “new normal,” there has been an increase of cyberattacks on retirement plans and participant accounts through unauthorized distributions. How did this happen?
On August 31st, 2021, the IRS issued guidance extending tax filing deadlines for Form 5500 in areas designated by the Federal Emergency Management Agency (FEMA) as qualifying for assistance due to Hurricane Ida and other recent natural disasters. This extension applies not only to Form 5500 filings but also to Form 8955-SSA.
On November 4, 2021, the IRS announced the Cost of Living Adjustments affecting the dollar limitations for retirement plans for 2022. In October, the Social Security Administration announced a benefit increase of 5.9%, the largest increase in nearly 40 years.
So, you established a 401(k) plan for your company and have been contributing consistently for years. The plan has likely afforded your company significant tax savings and has allowed you to attract and retain quality employees.
A crucial requirement for 401(k) plans is that the plan must be designed so it does not unfairly favor highly compensated employees (HCEs) or key employees (such as owners) over non-highly compensated employees (NHCEs). To satisfy this requirement, the IRS requires that plans pass certain nondiscrimination tests each plan year.