Newsletter Articles

A boomerang employee (as we will use that name in this article) is, quite simply, one who leaves and then comes back to work…a rehire. As is so often the case, the retirement plan rules related to rehires are quite different than those that apply to other areas of...

Signed into law in 1996, the federal Defense of Marriage Act (DOMA) is a small law that has caused big controversy. Introduction and Background DOMA is small in the sense that it consists of only three sentences, making it shorter to include the full text of the law...

Retirement plans are complicated beasts. The Pension Protection Act of 2006 was more than 1,000 pages long; one of the main reference books that retirement plan professionals use is more than 7,000 pages long; and there are countless other sets of rules and regulations that add tens of thousands more pages. All those pages mean a lot of moving parts, and all those moving parts mean that sooner or later, something is going to fall through the cracks no matter how much attention to detail is paid.

As the national economy continues its recovery, more and more businesses are beginning to see their financial situations improve to near pre-recession levels. Companies that have not thought about making profit sharing contributions for years are starting to consider their options.

In today’s business climate, it seems it is becoming increasingly common for businesses of all sizes to be structured using multiple companies. Maybe a business person is pursuing multiple ventures with different groups of co-owners. Perhaps a company decides to offer a new product or service and that is best accomplished via a separate entity. Sometimes it makes sense to create a separate company for each of a business’s locations. Still other times the owner of one company decides to buy another business.

At some point, almost every company that sponsors a retirement plan will experience the “fun” of tracking down a missing participant in order to pay a benefit. Although difficult to avoid completely, there are steps employers can implement as part of normal operations that can greatly minimize the headache. One of the most effective steps is to distribute benefits to former employees as soon as possible after termination of employment, before they have an opportunity to become missing.

Anyone who has ever watched late night television is familiar with the ubiquitous Top 10 List, counting down humorous examples of whatever is in the news. Not to be upstaged, the IRS has its own Top 10 List—the top 10 plan compliance failures found in voluntary correction filings.

There are few things that will give a person that sinking feeling in the pit of their stomach like opening the mailbox and seeing an envelope with the words “Internal Revenue Service” (or Department of Labor) in the return address. It is similar to seeing that police car as you drive down the highway; you might not even be speeding, but you immediately slow down and wonder how you will look in stripes.

There are many reasons for the wide popularity of 401(k) plans, one of which is that they shift the funding burden from employers to employees. But this advantage may be diminished for plans classified as “top heavy” where special contribution rules kick in that plan sponsors may not be aware of. What follows is a detailed look at the impact of the top heavy rules on 401(k) plans and some strategies for minimizing the cost to employers.

The rules that govern the behavior of retirement plan fiduciaries are quite complex. Any time we are required to deal with complicated subject matter, things can get confusing, potentially leading to decisions based on a misunderstanding.