BY KEVIN DONOVAN AND LYNN M. YOUNG As seen in the Summer 2014 issue of Plan Consultant Magazine Many problems in solo owner-participant defined benefit plans can be avoided by knowing what your client’s funding objectives and projected cash flow are before you design…
Defined Benefit Plans for Sole Proprietors
If you’re self-employed, your retirement choices are not limited to a Simplified Employer Pension Plan (“SEP”) or other defined contribution plans. Sole proprietors can establish a defined benefit plan. Depending on your age, the annual tax-deductible contributions you may make can…
Eligibility and Entry
What is the difference between eligibility and entry? Eligibility: A plan may exclude certain employees from participating in the plan based on job class or other non-discriminatory criteria (i.e., union, leased, non-resident alien, etc). An eligible employee becomes a participant…
Vesting
Benefits accumulated in a retirement plan on behalf of employees may be subject to a vesting schedule. Vesting occurs as the ownership of retirement plan dollars transfers to the employee based on their years of service. It is important to…
Coverage Testing
Coverage testing analyzes whether an adequate proportion of the employees that the plan benefits are non-highly compensated employees (NHCEs), as qualified retirement plans cannot discriminate in favor of highly compensated employees (HCEs). Coverage testing is conducted for each type of…
PPA Plan Restatements – Retirement Plan Update June/July 2014
View this Newsletter Focus: Ready or Not, Here it Comes…the PPA Plan Restatement Background Types of plan documents Individually designed Pre-approved Restatement cycles IRS letters Protected benefits Restatement process Same gender marriage interim amendments Defense of Marriage Act (DOMA) By Robbie…
Penalty Relief for 5500-EZ Late Filers
Pilot Penalty Relief Program – Late Annual Reporting for Non-Title I Retirement Plans (“One-Participant Plans” and Certain Foreign Plans) The IRS has issued guidance for late filers of the Form 5500-EZ (Revenue Procedure 2014-32). If you are a late filer,…
Key Employees and Top Heavy Status
Key Employees A retirement plan is considered to be top heavy when a significant portion of the money in the plan is attributable to key employees. An employee is a key employee if they are: Top-Heavy Status – Defined Contribution…
Defined Benefit Plan White Paper
“Defined Benefit Plans: Explained in Plain English” Summary: Most people are familiar with 401(k) plans and profit sharing plans; however, plans like these account for only 60% of qualified retirement plan assets. The remaining 40% is found within defined benefit plans,…
Accepting Rollovers to Qualified Plans
In April 2014, the IRS issued Revenue Ruling 2014-9 which provides guidance for accepting rollovers into a qualified plan. If your plan allows for rollovers, before accepting the rollover, the Plan Administrator must reasonably conclude that the rollover contribution is…