Tax Credit for Small Employers

The IRS offers an incentive for “small employers” who adopt a new retirement plan, providing a tax credit of up to $500 per year for start-up, administration and employee education costs for the first 3 years of the plan.  

IRS Provides Guidance on Late 60-Day Rollovers

On August 24, 2016 the IRS released Rev. Proc. 2016-47 providing a new “self-correction” program for taxpayers who miss the 60-day window for rolling over a distribution from an IRA or qualified retirement plan. Prior to this guidance, a taxpayer who was unable to complete a rollover within the required time frame could only qualify for a tax-free rollover after the 60-day period by seeking IRS approval.

In-Service Retirement Plan Distributions

When can a participant receive a distribution from a retirement plan while still working?

It depends. A plan may (but is not required to) allow participants to receive in-service distributions. In addition, certain conditions must be satisfied which are set forth under the Internal Revenue Code, regulations and IRS guidance.

IRS Guidance on Mid-Year Changes to Safe Harbor Plans

In January 2016, the IRS issued Notice 2016-16 providing long-awaited guidance on when changes can be made to safe harbor 401(k) plans mid-year. Previous IRS guidance (formal and informal) seemed to indicate there were only limited circumstances under which a safe harbor plan could be amended prior to the first day of the following plan year. Thankfully, this notice reflects an apparent shift in the IRS’s position and provides sponsors of safe harbor 401(k) plans with much greater flexibility throughout the year. The notice does contain a short list of changes that are specifically prohibited, but many changes are permissible provided certain conditions are satisfied.

Fidelity Bond FAQs

What is a fidelity bond?

A fidelity bond is a special type of insurance that protects plan participants from the risk of loss due to acts of fraud or dishonesty by plan officials.

Is a fidelity bond required for my plan?

Generally, yes. With limited exceptions, all qualified plans (i.e. 401(k) plans, profit sharing plans, ESOPs, certain 403(b) plans, etc.) are required by law to be covered by a fidelity bond.

Solo 401(k) Plan Basics

What is a solo 401(k) plan?

Although this is a term commonly used in the industry, a “solo 401(k) plan” is simply a regular 401(k) plan that only provides benefits for the sole owner of a business (or the owner and his or her spouse), or the partners of a partnership (or partners and their spouses). Under the regulations, these types of plans are referred to as “one-participant” plans.

IRS Provides Relief for Late Filers of Form 5500-EZ!

After the expiration of a pilot program earlier this year, the IRS issued Rev. Proc. 2015-32 establishing a permanent program providing relief for plan sponsors who are required to file Form 5500-EZ but have failed to do so. Under this program, “one-participant” plans can avoid hefty penalties by filing late returns voluntarily, following certain procedural requirements, and paying a modest filing fee.

Plan Compensation – Not So Simple!

At face value, it seems like “compensation” would be one of the simplest issues to deal with in a retirement plan, but it is actually one of the most complex. Understanding what compensation is “plan eligible” is one of the biggest headaches for plan sponsors and an area in which plan sponsors often make mistakes.

If you just think about all of the different forms of compensation you pay your employees (i.e. bonuses, commissions, fringe benefits, paid sick time, vacation time, automobile allowance, severance pay, group term life in excess of $50,000, etc.), it becomes clear why this is such a complex issue!

IRS Provides Welcome Relief for Plan Sponsors!

Mistakes happen! It is inevitable because the rules governing retirement plans are complex and always changing. The IRS Employee Plans Correction Resolution System (EPCRS) has done wonders in allowing plan sponsors to correct mistakes, often without seeking approval from the IRS, and avoid costly sanctions and fines.

IRS Announces 2015 Plan Limits!

On October 23^rd, the Internal Revenue Service announced 2015 cost-of-living adjustments applicable for qualified retirement plans and IRAs. The following table provides a summary of the most common limitations.