Newsletter Articles

It seems that every month there are new stories in the financial press about participants suing their employers for mismanagement of the company 401(k) plan. While most of these suits have been directed at larger companies, the increasing frequency has employers of all sizes looking for ways to minimize their liability. One way to do that is to comply with a set of “safe-harbor” rules found in section 404(c) of ERISA.

Very few employers have any desire to get caught in the middle of the divorce proceedings of their employees; however, when company retirement benefits become part of the negotiations, unsuspecting employers can be pulled into the fray.

USA Today recently ran an article describing how many companies are using alternative work arrangements to meet staffing needs during the economic recovery. Such arrangements may include use of leased employees, independent contractors or part-time/seasonal workers, all of which are commonly referred to as contingent workers.

Cash balance plans have enjoyed a recent resurgence in popularity. However, these plans, which can provide tax-deductible benefits as much as five times greater than 401(k) profit sharing plans, have actually existed for more than 30 years. When the Pension Protection Act of 2006 (PPA) resolved much of the legal uncertainty of these plans, small and large companies alike showed a renewed interest. According to a recent research report, the number of cash balance plans increased by more than 23% from 2006 to 2007 and more than 75% of existing cash balance plans are sponsored by companies with fewer than 50 employees.

Maximum compensation limit, Defined contribution plan maximum contribution,
Defined benefit plan maximum benefit, etc.

The end of the year is fast approaching which signals important assignments for plan administrators. First are the items that must be completed by year-end, such as establishing a new plan or making required minimum distributions. There is also a new in-plan Roth conversion option that requires action before year-end if participants want to take advantage of this special rule.

The continuing popularity of the 401(k) plan has made it the most widely used savings plan in the country. As employers have had to shift limited resources to cover the ever-increasing cost of other benefits, the ability for employees to contribute to their retirement savings helped to ensure the continuation of these plans.

Designated Roth contributions (a/k/a Roth 401(k) or Roth deferrals) have been available since 2006, but a change in the tax laws governing Roth IRAs has reenergized discussions about this feature. This article is in Q&A format and addresses some of the more common questions about Roth 401(k) contributions. But first, a brief overview…

Every qualified retirement plan has a specific deadline by which employer contributions must be deposited to the plan for each plan year. However, the rules concerning participants’ contributions have not been as clear. For example, in 401(k) plans, employees typically defer a portion of their weekly or biweekly paychecks. How soon should these contributions be deposited into the plan?

It seems that every time you turn around, you are required to provide yet another notice to the participants in your company’s retirement plan. While plan-related notices are not a new phenomenon, the Pension Protection Act (PPA) took the concept to a different level by mandating a host of new notices.