Tax planning as in life can be a series of trade-offs. Whether to have a SIMPLE-IRA vs. a 401(k) plan is one of those trade-offs. And if you currently have a SIMPLE-IRA and want to change to 401(k), then you’ve got a November 1, 2017 deadline approaching.
That’s the date by which employers have to provide notice to their employees that 2017 will be the last year for the SIMPLE-IRA and will be replaced by 401(k).
It occurred to me after my last post, October 1 401(k) Safe Harbor deadline gets closer, that the White Rabbit could relate to ERISA.
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 2017, the maximum is $18,000 plus a $6,000 catch if age 50 or older.
“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 fiduciary litigation.
To no one’s surprise, the recent Kravitz Cash Balance Research Report indicates that the number of new Cash Balance plans increased 17% in 2016, outpacing the 3% growth of 401(k) plans. And also no surprise that 92% of the cash balance plans are sponsored by companies with less than 100 participants.
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
Consider a typical retirement plan sponsored by a private employer. The employer is a fiduciary to the plan along with employees who individually serve as trustees or members of the plan’s investment or retirement committee.
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 And, as in the past, there will be many plan sponsors who must indicate on the 5500 they have outdated fidelity bonds or none.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 are necessary in Nevin Adams’ article, Fraud Scheme Taps into 401(k) Account for $40,000.
Last month’s Supreme Court decision, Advocate Health Care Network v. Stapleton, upholding ERISA exemption for church-affiliated pension plans was a reminder that not all benefit plans are subject to ERISA. Indeed, non-profit employers who sponsor 403(b) plans can choose to be exempt from ERISA. But they have to tread carefully.
Or six non-alliterative reasons why waiting until the last minute to establish a retirement plan can be costly. And by last minute, I mean year-end. Continue Reading
