Category Archives: 401(k) Plans

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How not to hire an ERISA auditor

Selecting an auditor for an ERISA plan is one of those fiduciary responsibilities which has been a continuing concern of the Department of Labor (“DOL”). At a June 25, 2019 meeting of the DOL’s ERISA Advisory Council, James Haubrock of the American Institute of CPAs responded to the Council’s request for recommendations on how the … Continue Reading

The elephant in the room for ERISA purposes could be that “other” company

  The  passage of the Tax Reform and Jobs Act (“TRJA”) in 2018 made entity selection an important part of tax planning. The TRJA made fundamental changes affecting individual and entity tax rates. Combined with corporate transactions for strategic reasons and business owners acquiring interests in other companies, we’re seeing businesses and owners using multiple … Continue Reading

Take Advantage of ERISA Safe Harbors: They can help penetrate the ERISA fog.

Attorneys would define a Safe Harbor as a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. In our ERISA world, a Safe Harbor is a provision of the retirement plan law  that can  cut through the sometimes fog of ERISA and provide … Continue Reading

“Compensation” for Sole Proprietors, Partners, and LLC Members…It’s complicated.

Compensation for employees is some variation of taxable wages reported on Form W-2. For allocation purposes, the employer or payroll provider downloads the census and compensation data based on the plan’s definition of compensation into a spreadsheet at the end of the year. It’s a little more complicated, of course, but let’s leave it at … Continue Reading

Playing the game of 401(k) audit roulette: the odds are getting shorter.

If you’re in the retirement plan business, you’ve heard the term “audit roulette”.  It refers to the belief by some employers that the odds of their retirement plan getting audited by the IRS are in their favor. Well, those odds are getting worse. The IRS is taking technology to the next level using  “data driven … Continue Reading

Will 2016 Form 5500 reveal outdated fidelity bonds or none at all?

The 2016 Form 5500 deadline has come and gone for calendar year taxpayers, and a number of them revealed outdated fidelity bonds or retirement plans without bonds at all. The fidelity bond requirement is high up on the Department of Labor’s compliance priorities so it’s not a stretch to assume that the Department of Labor monitors this … Continue Reading

“Decumulation”: It’s here now for individuals approaching retirement

“Decumulation” is a word that has now entered the lexicon of those individuals approaching retirement. The definition of which is the conversion of retirement plan assets accumulated during an employee’s working life into pension income to be spent during retired life. It’s a new risk for the record number of those moving from the accumulation phase … Continue Reading

Department of Labor targets retirement plans with missing participants

It’s a familiar story: you or your retirement plan’s third party administrator (TPA) need to make a benefit distribution to an ex-employee. But the employer’s records are out of date and the former employee cannot be located. Worse yet, the missing participant has attained age 70½ so the plan is required to make minimum distributions … Continue Reading

October 1 401(k) Safe Harbor deadline gets closer

That’s No. 3 in my Pension Plan Procrastination Perils Proper Personal Planning list. If you want to set up a new Safe Harbor 401(k) plan for 2017, it has to be done by October 1. A Safe Harbor plan permits owners and other Highly Compensated Employees (HCEs) to maximize their contribution regardless of how much the Non-HCEs contribute. For … Continue Reading

Seven ways a fiduciary can follow “Procedural Prudence”

“Procedural Prudence” is not a new concept. It’s underlies one of ERISA’s bedrock requirements. A fiduciary must discharge its duties prudently with care, skill, and diligence. It’s the process by which a fiduciary can accomplish this. In other words, it’s the “how” a decision gets made which is what the courts have focused on in ERISA … Continue Reading

Red flags on Form 5500 alert Internal Revenue Service and Department of Labor to plan issues

For calendar year ERISA plans, today is the due date for filing their 2016 Form 5500 unless extended. While the vast majority of employers will meet that deadline, some will have red flags on their returns that could pique the interest of the Internal Revenue Service (“IRS”) and the Department of Labor (“DOL”).… Continue Reading

Timely reminder why an ERISA fidelity bond is necessary

July 31st, is of course, the due date (unless extended) for calendar year ERISA plans required to file Form 5500 for the 2016 plan year. And, as in the past, there will be many plan sponsors who must indicate on the 5500 they have outdated fidelity bonds or none. Here’s a timely reminder why they … Continue Reading
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