Most pretax retirement savings are taxed as ordinary income, taxed at one’s marginal tax rate. But under specific circumstances employer securities can be taxed differently.
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In 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act changed eligibility requirements so that employees who are credited with at least 500 hours in three consecutive years (beginning on January 1, 2021), must be allowed to participate under a 401(k) plan’s salary deferral provision.
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Many employers believe that offering loans in qualified retirement plans is a major benefit. Participants have easier access to their savings, in case of an unexpected financial need, and the employer can elect to use payroll deductions to credit loan payments back to the participants’ accounts for administrative ease.
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Electing a plan’s definition of compensation may be one of the most important elections in any plan document. The elections made will significantly affect the plan’s design and its operations.
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IRAs and qualified retirement plans (QRPs) are intended to be used for retirement. Therefore, the tax laws and regulations encourage people to leave their money in an IRA or QRP until they retire. If distributions are taken from an IRA (including an IRA holding SEP contributions) or QRP before the account owner reaches age 59½, a 10 percent early distribution penalty tax is assessed on the taxable amount of the distribution, unless a penalty tax exception applies.
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Although multiple employer plans (MEPs) have been around for decades, they haven’t always had a starring role in the retirement industry. That, however, may be changing.
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If a client has received an extension to file his taxes, he may believe that he has an extension to make a prior-year contribution. It is important to understand that a tax filing extension is not an extension to make a prior-year IRA contribution: it is only an extension to file the tax return. But other postponements may apply to some of your clients.
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When a business is acquired or sold, the employer’s business structure may change (e.g., a sole proprietorship may become a corporation); the employer may join or leave a controlled or affiliated service group; or the employer may change for one or more individuals. Such business transactions could affect many aspects of the business’s qualified retirement plan.
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With tax season upon us, many employers are determining when to fund and deduct the employer contributions that they’ve allocated to their retirement plans. Different contribution deadlines apply based on the type of contribution being made and the business tax return due date.
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The Department of Labor (DOL) recently issued a final amendment to the Voluntary Fiduciary Correction Program (VFCP), incorporating a Self-Correction Component (SCC) for eligible transactions under the program.
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The Treasury Department announced March 11, 2025, that it will not enforce penalties or fines associated with the beneficial ownership information reporting rule under existing regulatory deadlines pursuant to the Corporate Transparency Act (CTA).
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With the arrival of a new year comes the availability of several SECURE 2.0 provisions that affect how workers can save for their retirement.
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The Internal Revenue Service (IRS) has issued a proposed regulation, providing guidance for employers that are required to include an automatic enrollment provision with their 401(k) or 403(b) plan in order to comply with the SECURE 2.0 Act of 2022 (SECURE 2.0).
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Working with plans that include both nonunion and union employees is not as intimidating as it may seem. There are a few things to keep in mind if you work with a plan that manages both employees that are a part of a union and those that are not union employees.
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During the Great Depression, a common practice among contractors bidding for federal contracts was reducing workers’ wages; and thereby, their labor costs, to win bids. While prevailing wage laws had existed on a state and local government level for more than three decades at this time, the first and most significant federal law–protecting the workers’ and their families’ welfare–was the Davis-Bacon Act of 1931.
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Under most circumstances, a plan sponsor may not distribute plan assets to a participant without the participant’s consent as long as the distribution is “immediately distributable.”
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Although RMDs from separate IRAs can be aggregated and taken from one Traditional IRA, individuals cannot satisfy RMDs from qualified retirement plans by taking a Traditional IRA distribution. In addition, individuals cannot satisfy Traditional IRA RMDs by taking distributions from their qualified retirement plans.
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Plan administrators and plan participants must limit the elective deferrals that are contributed to their qualified retirement plans each calendar year to the Internal Revenue Code Section (IRC Sec.) 402(g) limit. The limit includes elective deferrals (including both pretax and designated Roth deferrals) that participants can defer into their qualified retirement plans (in aggregate) for each taxable year.
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