Tag Archives: 401k

2019 Retirement Plan Numbers released

The IRS on Thursday increased the pre-tax contribution limits for employees who participate in a 401(k), 403(b) and most 457 plans to $19,000 from $18,500. That limit also applies to the federal government’s Thrift Savings Plan.

For participants ages 50 and over, the additional catch-up contribution limit, which is set by law, will stay at $6,000.

Meanwhile, IRA contribution limits were raised to $6,000 from $5,500 — the first time the IRS has increased the limits since 2013. The catch-up contribution limit for people 50 and over will still be $1,000.

IRA contribution limits were raised to $6,000 from $5,500 — the first time the IRS has increased the limits since 2013. The catch-up contribution limit for people 50 and over will still be $1,000.

  • 401(k) will be $19,000 (catch-up stays at $6,000)
  • Maximum compensation is $280,000 (up $5,000)
  • Defined Contribution limit is $56,000 (up $1,000)
  • Highly Compensated Employee income designation is $125,000 (up for $5,000 for the first time in many years)
  • Key Employee is $180,000 (up $5,000)
  • IRA finally went up to $6,000 (first time in many years it raised and catch-up remains at $1,000)
  • SEP remains at $600 for eligibility purposes (be careful, anybody that earns at least $600 in a year has that year count for eligibility)
  • SIMPLE has raised to $13,000 (up $500 for the first time in many years and catch-up remains at $3,000)

Make Sure You Take Sufficient Steps to Find Missing Participants

One more reason why discount 401k plan administrators are often not enough… Preferred TPA’s automatically roll your missing participants out according to the rules…

“When searching social media sites, it may be necessary to follow the trail to the missing participant’s family and friends, known affinity groups or professional organizations, as well as any book, sporting, and retirement clubs the missing participant may have connected with…. Work with the company’s legal department to subscribe to a robust public records database to assist in finding missing participants, their family members, and friends. Such lists may include telephone numbers…. Piggyback on the investigative tools and contracted resources already established by the company’s security team and fraud department.” – DOL Guideline when terminating a plan

Do you have missing participants in your 401K?

As employees terminate, they typically leave their balances with the prior employer.  In these cases, they are still participants – meaning you still pay to administer their account, and you have an obligation to communicate with them as much as any active employee.   This is not a problem, until you lose track of the ex-employee.  While it is not your Fault, it is still your responsibility under the law.

50% of Millenials in a recent survey learned of a retirement account with a previous employer they didn’t realize they had.

Enter the “Missing Participant IRA.”  The best solution is to get the ex-employee to take their balance with them when they leave.  Since that doesn’t always work, you need a mechanism to handle this.  With some of our clients we use a third-party outside service, but more and more high-end TPAs are providing this service automatically.

 

If you are concerned about COMPLIANCE in your 401k just give us a call.

Another 401k suit

NAPA is reporting another fee-based lawsuit against a Plan Sponsor:

“Yet another 401(k) provider and investment manager has been sued by one of its own participants for breaching its fiduciary duties to the plan – and while the claims are familiar, the venue is different.

This time the target is Mutual of Omaha in a suit filed last week in the U.S. District Court for the District of Nebraska by Berger & Montague and Schneider Wallace Cottrell Konecky Wotkyns LLP on behalf of Tamera S. Lechner, a participant in the plan, which had approximately 6,000 participants and some $500 million in assets.

Lechner alleged that the plan’s fiduciaries selected United of Omaha-branded investment funds “when each of these Omaha-branded funds invested all of its assets in another publicly available investment fund managed by an unrelated third party – causing the Plan to pay a fee to United of Omaha in addition to the fee charged by the underlying fund’s manager when the Plan could simply have offered the underlying fund and avoided paying any additional fee to United of Omaha.”

 

For the full article click here

Tax Reform affects 401k matching

Posted by John Sullivan on 1/26/18 in 401k specialist magazine:

 

The controversial tax reform legislation recently passed is paying off in the form of a boon for to corporate pay and benefits, and Willis Towers Watson is attempting to gauge just how much.

The company surveyed a swath of large and midsize employers and found that nearly half (49 percent) are considering a change to employee benefits, compensation, total rewards and executive pay programs either this year or next.

“The tax reform law is creating economic opportunity to invest in their people programs,” John Bremen, managing director, human capital and benefits, Willis Towers Watson, said in a statement. “While a significant number have already announced changes to some of their programs, the majority of employers are proceeding to determine which changes will have the highest impact and generate the greatest value.”

Two-thirds of those (66 percent) surveyed are planning or considering making changes to their benefit programs or have already taken action.

The most common include expansions to personal financial planning (34 percent), increasing 401k contributions (26 percent) and increasing or accelerating pension plan contributions (19 percent).

Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family Medical and Leave Act’s tax credit available for paid leave for certain employees.

Sixty-four percent of employers are also planning or considering taking action on their broad-based compensation programs or have already taken action.

The most common include conducting a review of their compensation “philosophy” (43 percent), addressing pay-gap issues (36 percent) and introducing a profit-sharing or one-time bonus payout to all employees (21 percent).

About four in 10 companies (41 percent) are planning or considering changes to their executive pay programs.

The most common include spending more time and analysis on this year’s incentive target (33 percent) and increasing the use of discretion in 2018 incentive plans (19 percent.

November 2018
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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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