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When to Set Sail with Safe Harbor

…a plan measures up. Here they are in a nutshell: The ADP test – which stands for “Actual Deferral Percentage” looks at how the deferral rate for highly compensated employees compares to that of non-highly compensated employees. Typically, the deferral percent for highly compensated employees…

A Deeper Dive into Cash Balance Plans

…more than the amounts allowed by a current 401(k) or similar plan Businesses with older, more highly compensated employees in leadership positions Which employees benefit most? All participants can enjoy significant retirement benefits from cash balance plans. But the typical cash balance calculations allow a…

SECURE 2.0 Act Provisions to Consider in 2025

…contributions on account of participants’ qualified student loan payments (QSLPs). A QSLP is a repayment of a student loan for qualified higher education expenses of the employee, the employee’s spouse, or the employee’s dependent. The IRS released Notice 2024-63 to clarify the rules surrounding QSLPs….

Employer Connect: When to Set Sail with Safe Harbor

employees. This includes those employees who don’t defer. A quick note: Safe Harbor contributions must always be 100% vested. That means that employees can count these contributions in their balances without forfeiture upon termination of employment. Adopting a Safe Harbor provision can help your plan…

Partial Plan Termination and the Applicable Period Case Study

…mind that employee turnover is not the only reason for a partial termination. A partial termination can also happen if a sponsor adopts amendments that adversely affect the rights of employees to vest in benefits under the plan, excludes a group of employees that previously…

Avoid Plan Pitfalls During Testing Season

…– if “key employees” (owners and the most highly paid employees) accumulate more than 60 percent of plan assets, the plan is considered “top heavy,” and additional contributions to non-key employees must be made. The plan’s vesting schedule may also have to be accelerated. In…

March 1st and Excess Salary Deferrals

…salary deferrals (pre-tax and designated Roth) an individual makes to all of the following plan types: 401(k), 403(b), Savings Incentive Match Plans for Employees (SIMPLE) plans [both SIMPLE IRAs and SIMPLE 401(k) plans[1]] and Salary Reduction Simplified Employee Pension (SARSEP) plans.[2] (Note: A person who…

A SIMPLE Switch

…maintained by the employer Must file a Form 5500 annually Voluntary employee deferrals Mandatory employer contributions (generally, 3% match or 2% nonelective) Immediate vesting for contribution types Additional information at IRS SIMPLE 401k facts Safe Harbor 401(k) No limit on number of employees Voluntary employee

When Does a 401(k) Deferral Become a Catch-Up Contribution?

…participant’s compensation up to $66,000 for 2023). An example of a plan-imposed limit would be if the plan document were to specify that employee salary deferrals are limited to 10 percent of a participant’s annual compensation. Finally, a plan’s ADP limit on employee salary deferrals…