Pinnacle Plan Design is a third party administrator (TPA) for employer-sponsored qualified retirement plans. We specialize in retirement plan design, administration and actuarial consulting. Pinnacle is proud to offer retirement plan administration services in Wichita, KS (Kansas), as well as nationally.
Helpful 401(k) Information
At Pinnacle Plan Design, we take pride in our ability to explain the complicated retirement plan regulations in plain English. The following information helps explain the difference between various 401(k) plan aspects and designs.
Pre-Tax Elective Deferrals
- Represents a deferral of current salary.
- Cannot take receipt of salary and then contribute.
- Corresponding deferral of federal and state income tax.
- Always subject to current Social Security and Medicare Tax.
- Identified on Form W-2
Roth Elective Deferrals
- Represents a deferral of current salary.
- Cannot take receipt of salary and then contribute.
- Currently taxed (and won’t be taxed again later).
- Must be accounted for in plan separately from pre-tax (basis and gain or loss)
- If plan permits, any participant can contribute, regardless of AGI
- i.e. no income restrictions unlike Roth IRA contributions
401(k) Plans With Auto Enrollment
- Provide for automatic 401(k) enrollment at a stated percentage
- Built on the concept that employees don’t elect to contribute simply because they never take action (either due to lack of understanding or lack of initiative)
- May provide for pre-tax or Roth
- Plan must permit employee to elect out (prior to contribution) or elect to discontinue future contributions.
- Plan may offer the option to request refund within first 90-days.
- QDIA is required.
- 45.9% of plans have automatic enrollment feature
- Most common default rate is 3% of pay
- 55.2% of plans with auto enrollment increase default rates over time
- Tricky to administer
- Research is conflicting
- Some believe participant may have enrolled at a higher rate had they not be defaulted
- Rates of auto enrollment plans includes vast array of plan sizes.
Contact: Third Party Administrator Wichita
Pinnacle Plan Design is proud to offer retirement plan administration services in Wichita, KS (Kansas), and surrounding areas including Overland Park, Kansas City, Olathe, Topeka, Lawrence, Shawnee, Manhattan, Lenexa, Salina, and Hutchinson.