SECURE 2.0: The Most Significant Retirement Legislation Since the Revenue Act of 1978
The Retirement Plan Blog
by Jerry Kalish
2M ago
Here’s why we think so. Since the passage of ERISA in 1974, retirement plan legislation has been a series of technical and tax-related changes. The Revenue Act of 1978 started out the same way with its focus on: Increasing economic growth through income tax reductions to stimulate consumer and investment spending, and Improving equity in the tax system and simplifying it. Sometimes during the legislative process an unrelated provision is added to the law. That’s what happened here. Section 401(k) found its way into the Internal Revenue Code. In one fell swoop, this new Code Section replac ..read more
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When your SIMPLE-IRA no longer fits, maybe it’s time for a 401(k) plan…and November 2 is almost here
The Retirement Plan Blog
by Jerry Kalish
5M ago
Kids will outgrow their clothes. Sometimes that happens with retirement plans. If you have a SIMPLE IRA, it may have fit in the beginning. But if you want to change to a 401(k) plan in 2024, you need to take action by November 2. That’s the date that employers must provide notice to their employees that 2023 will be the last year for the SIMPLE IRA, and that it will be replaced by a 401(k) plan in 2024. But keep reading because a new tax law which providres for a mid-year replacement is discussed later. Reasons to Change A SIMPLE IRA is relatively easy and inexpensive to administer. 401(k) pl ..read more
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Missed the 401(k) Restatement Deadline? Here’s Your Plan B for Compliance
The Retirement Plan Blog
by Jerry Kalish
1y ago
The deadline for restating a 401(k), profit sharing, or money purchase pension plan has come and gone.  So, what can an employer do? It was, after all, the employer’s responsibility to ensure that the plan was updated and signed by July 31, 2022. But if an employer did miss that deadline, there is a Plan B. But first let’s put July 31, 2022, into context. That’s the date the IRS required pre-approved plans to be updated for the last 6 years of legislative and regulatory changes. It’s referred to as a “Cycle 3 restatement” in the retirement plan world and allows the employer to have “reli ..read more
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Rethinking 401(k) Plan Success: The power of deferral rates
The Retirement Plan Blog
by Jerry Kalish
1y ago
From the beginning of 401(k) plans, the retirement industry has focused on the performance of individual funds as the key driver of retirement readiness. But a study by the Putnam Institute in 2006 and repeated in 2012 concluded that increasing deferral rates have the greatest potential impact on a 401(k) participant’s account balance at retirement The Putnam Study, Defined Contribution Plans: Missing The Forest For The Trees?, showed that fund selection was actually the least important factor compared to asset allocation, account rebalancing, and increased deferrals. The most important? Incr ..read more
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“Compensation” for Sole Proprietors, Partners, and LLP Members … It’s complicated.
The Retirement Plan Blog
by Jerry Kalish
1y ago
“Compensation” is a timely topic now for employers with retirement plans. It’s that time of the year when decisions are made about retirement plan contributions. The starting point for those decisions is “compensation”. That starting point is a straightforward matter when employees are involved. It’s some variation of taxable wages reported on Form W-2. But for sole proprietors, partners in a partnership, or members of a limited liability partnership, compensation is more complicated. It’s “Earned Income”, the Internal Revenue Code’s version of a calculus equation. Here’s why. Take a look at ..read more
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The box that has to be checked by July 31: Retirement Plan Restatement
The Retirement Plan Blog
by Jerry Kalish
1y ago
That’s the box that has to be checked by July 31, 2022. It’s the date the IRS requires that your 401(k) plan, profit sharing plan, or other defined contribution plan be restated to be in compliance with recent tax law changes. Here is a plain language explanation in Q and A format to help you understand why July 31 is one of those “don’t miss” dates: What exactly is a Restatement? Pre-approved plan documents are required to be rewritten, approved by the IRS, and adopted by plan sponsors every six years. This process is known as a Restatement and it allows the document language to be updated fo ..read more
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July 31, 2022 Restatement Deadline for 401(k) Plans Approaches: Carpe Diem
The Retirement Plan Blog
by Jerry Kalish
2y ago
I never thought my high school Latin could come in handy, let alone in our ERISA world. Heck, there wasn’t even ERISA back then. But here goes. The July 31, 2022 deadline for defined contribution plans such as 401(k), Profit Sharing, ESOPs, and Money Purchase Plans to be restated is not that far away. You’ll find the details here. If you miss the deadline to restate your qualified retirement plan, the IRS can disqualify it, and take away all its tax benefits. This means contributions might not be deductible or employees will have them immediately included in income. Therefore, restating your d ..read more
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ERISA Record Retention: How long is long enough?
The Retirement Plan Blog
by Jerry Kalish
2y ago
  ERISA record retention may not be of those sizzling retirement plan topics for some folks. But please don’t stop reading. It’s an important issue in today’s ERISA’s environment in which Plan Administrators and other fiduciaries must meet complicated compliance reporting requirements, oversight from regulatory agencies, and sometimes litigation. So here is some basic information about document retention for ERISA plans in a Q and A format. What are the legal requirements? The short answer is that all plan-related materials should be kept for a period of at least six years after the date ..read more
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IRS now requires an employer discretionary match to be “definitely determinable”
The Retirement Plan Blog
by Jerry Kalish
2y ago
“Definitely Determinable” is one of those pre-ERISA concepts that are still applicable. It means that in order for a retirement plan to be considered “qualified” (eligible for favorable tax treatment), a participant’s retirement benefit had to be determined in accordance with a stipulated formula that is not subject to the discretion of the employer. The purpose of which is, of course, to eliminate the possibility of benefits favoring the higher paid employees. It’s long been required for defined benefit pension plans in which it’s a straightforward matter. But what about those 401(k) pl ..read more
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The IRS Required Restatement of 401(k) and Profit Sharing Plans: A Plain Language Explanation in Q & A Format
The Retirement Plan Blog
by Jerry Kalish
3y ago
If you’re an employer who has adopted an IRS pre-approved defined contribution plan such as 401(k) or profit-sharing, you’ll need to have the Compliant box checked no later than July 31, 2022. Plan document compliance to be specific. It’s the IRS requirement that a retirement plan document must be up to date to qualify for favorable tax treatment. IRS pre-approved plans must be rewritten, reviewed, and approved every six years. Once approved, employers who use them must adopt the new plan documents by a certain date. This is called the Restatement process, and as noted in the headline, this Re ..read more
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