Government regulations require that participant contributions to a 401k be deposited to the plan on the earliest date that they can be reasonably segregated from the employer’s general assets, but in no event may they be deposited later than the 15th business day of the month following the month in which the participant contributions are deducted from their pay. This does not mean that you can wait until the 15th business day of the month following the month in which the contribution was deducted just for the convenience of doing so. If you can deposit the funds in one or two days, you must do so.
Yes. Form 5500 and the Schedule R require you to answer questions about all your employees, not just the ones that met the eligibility requirements of your plan.
IRS Discrimination testing divides employees up into three groups, those that work 1,000 or more hours in a year, those that work 500 – 999 hours in a year and those that work less than 500 hours in a year. We need their actual hours to put them in the proper group and to determine whether or not they accrue a benefit and/or vesting service.
We must determine if you potentially have a controlled group of companies. IRS Regulations require that all employees of a controlled group must be tested together for discrimination purposes.
A required minimum distribution (RMD) is the minimum amount a person must withdraw from a 401(k) plan once that person is retired and 70½ years old. If an employee is still working at age 70½, they may be permitted to delay withdrawing the RMD from the 401(k) until retirement (unless they are a five percent owner of the company sponsoring the plan). If a person does not withdraw the RMD, they will be fined 50 percent of the required amount not withdrawn and will still have to pay taxes on the taxable portion of the full RMD. The amount of each person’s annual RMD is based on the value of the 401(k) plan account at the prior year-end and a distribution period corresponding to the individual’s age (available through the IRS’s life expectancy tables). If a person has more than one 401(k) plan account, he or she must calculate and withdraw the RMD for each account separately.
Our ERISA 3(16) solution removes your responsibility for most common day-to-day administrative tasks. QPC takes over the tasks that many employers don’t want to handle or don’t have the expertise in house to manage.
3(16) Fiduciary Services must be selected by the plan sponsor, additional fees may apply.
Depending on the plan’s policy, the employee may be required to pay back the loan right away or pay the remaining amount to an IRA or another plan as a rollover within 60 days.
If an employee can’t repay a loan, the money will be treated as distributed, or withdrawn. The individual will be taxed on the outstanding balance and—unless the employee is at least 59½ years old—may face an early withdrawal penalty.
A catch-up contribution is an additional contribution to a 401(k) plan that can only be made by an employee who is at least 50 years old. Once an employee has hit the plan’s contribution limit or the annual deferral limit of $18,000 (in 2017), he or she may contribute up to $6,000 as a catch-up contribution. Most employers offer this option, and some companies also match a percentage of the catch-up contribution.
Vesting refers to the rights of ownership of a 401(k) plan account balance. Any funds contributed by the employee are, under the Employee Retirement Income Security Act of 1974 (ERISA), fully vested—or owned outright by the employee with no risk of forfeiture. However, contributions made by the employer on a worker’s behalf may be subject to a vesting period, which is the amount of time an employee has to work for an employer before earning the rights to the company’s contributions to his or her account. Vesting schedules vary from company to company, and often phase an employee in to full ownership rights over several years. When an employee is fully vested, it means he or she has earned the rights to all of the money an employer has contributed on his or her behalf to the 401(k) plan account.
For example, a company might start contributing to an employee’s 401(k) plan account right after he or she starts participating in the plan. However, if the plan has a one-year vesting requirement, the employee will only have full ownership rights in that money after being employed there for a year. Once the employee works a year, he or she is fully vested in the employer’s contributions already made and going forward.