SECURE Act: How to take credit (tax, that is) for your retirement plan

The $1.4 trillion appropriations package signed into law by President Trump on December 20, 2019 designed to fund federal agencies through September of this year contained the most significant legislative enhancements to retirement plans in over 10 years.

These law changes designed to encourage retirement savings are bundled up in one of those Congressional legislative acronyms, the SECURE Act, which is political short hand for the Setting Every Community Up for Retirement Enhancement Act. I’ll be covering the most significant ones in later blog posts, but for now, here’s a summary of two tax credits you may find valuable. Continue Reading

Who owns a 401(k) participant’s personal information?

By Andrew S. Williams, Esq. on December 5, 2019 Posted in 401(k) Plans, 403(b) Plans, 457 Plans, Fiduciary Matters, Guest Post

Service providers for 401(k) and other retirement plans require access to personal data on participants including name, age, address, date of hire, compensation and possibly social security number to provide recordkeeping services. Are these plan service providers simply taking advantage of a business opportunity or are they improperly exploiting information that is a plan asset that plan fiduciaries must protect?

The Restatement Requirement for Defined Benefit Plans: FAQs for Employers Adopting a Pre-Approved Plan

By Jerry Kalish on October 1, 2019 Posted in Cash Balance Plans, Compliance, Defined Benefit Pension Plans, ERISA, Pension Protection Act of 2006

If you’re an employer who has adopted a pre-approved defined benefit pension plan, it’s time to amend and restate your plan. All defined benefit plans using pre-approved plan documents must restate their plan before April 30, 2020. It’s important that you understand why your plan document must be restated. What follows is a non-technical explanation in Question and Answer format.

How not to hire an ERISA auditor

By Jerry Kalish on July 18, 2019 Posted in 401(k) Plans, 403(b) Plans, Cash Balance Plans, Compliance, Defined Benefit Pension Plans, Fiduciary Matters

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 DOL could help Plan Administrators improve the process of selecting an auditor. You can read Mr. Haubrock’s testimony here which provides valuable recommendations.

But I’ll approach the auditor selection process from anther and more basic direction. If you are a plan sponsor with that fiduciary responsibility, here are a few mistakes to avoid:

Retirement Funds and Business Startups: Do “ROBS” Work?

By Andrew S. Williams, Esq. on June 18, 2019 Posted in 401(k) Plans, ERISA

Here’s a not unusual scenario for Baby Boomers who have reached their company’s retirement age but are not quite ready to retire. Why not start a business or even buy a franchise? That can require a large personal investment, but he or she has a sizable 401(k) account. Why not use those funds to start a second career?

Here’s how they work.

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

By Jerry Kalish on May 23, 2019 Posted in 401(k) Plans, Cash Balance Plans, Compliance, Defined Benefit Pension Plans, Employee Stock Ownership Plans

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 entities.

And that’s where the elephant in the room gets into the act. The elephant is the complex set of IRS rules that must be considered regarding retirement benefits offered to employees. Consider the following:

Defined Benefit Plans Have Issues Too

By Jerry Kalish on May 12, 2019 Posted in Cash Balance Plans, Compliance, Defined Benefit Pension Plans, ERISA

Defined benefit plans may have markedly declined (44% since 1975 according to the Department of Labor), but they haven’t become any more understandable to employers.

Indeed, the IRS continues to find the same type of mistakes during audit examinations. Here are the ones that made the IRS Top Ten list:

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

By Jerry Kalish on February 6, 2019 Posted in 401(k) Plans, 403(b) Plans, Cash Balance Plans, ERISA, Fiduciary Matters

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 fiduciary protection to plan sponsors and at the same time make their retirement plans more efficient and effective. Here is a brief description of some of them. Continue Reading

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

By Jerry Kalish on January 27, 2019 Posted in 401(k) Plans, 403(b) Plans, Cash Balance Plans

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 that for purposes of this post. But if you’re a sole proprietor, partner in a partnership, or member of an LLC taxed as a partnership, it’s definitely more complicated. Here’s why.

When your SIMPLE-IRA no longer fits, maybe it’s time for a 401(k) plan…and November 2 is almost here

By Jerry Kalish on October 15, 2018 Posted in 401(k) Plans

Kids can certainly outgrow their clothes, and so can employers with their retirement plans. A SIMPLE-IRA may have worked in the beginning, but if you want to change to a 401(k) plan in 2019, November 2 is the deadline to take action.

Employers must provide notice to their employees by that date that 2018 will be the last year for the SIMPLE; and that it will be replaced by a 401(k) plan. Why change from a SIMPLE to a 401(k) Plan? A SIMPLE is relatively inexpensive to administer, but here’s why 401(k) may be better for you. Continue Reading