Posts Tagged ‘401k plan’

Don’t Like Your Retirement Plan Design?

Friday, August 28th, 2015

Time’s Running Out to Establish, Alter Your Plan

Time's Running Out to Establish, Alter Your Retirement Plan Design - Rea & Associates - Ohio CPA Firm

If you haven’t made time to speak with a retirement plan specialist recently to make sure that your retirement plan still addresses your company’s unique needs, there’s a chance you are missing out on a more cost-effective solution. Your retirement plan team can quickly run some illustrative numbers to compare your SEP against a 401(k) plan to reveal whether a better option exists for your business.

Your SIMPLE IRA or Safe Harbor 401(k) plan isn’t going to establish or change itself and if you want yours to be effective in 2015, you need to know that an Oct. 1 deadline is looming – as though you really needed something else to worry about. Fortunately, a retirement plan expert will not only help you meet your deadline, they can make sure your plan is optimized to ensure maximum results.

If you’ve never taken the time to really understand how valuable your retirement plan can be for your business, this is your chance. Read on to learn six other reasons why you might want to pick up the phone and schedule a meeting with a retirement plan expert today.

Read: Why You Should Review Your Retirement Plan Documents Now

Six Reasons To Call Your Retirement Plan Administrator

  1. You have no retirement plan at all. Offering your employees a retirement plan is more than just a great recruitment tool; it’s an excellent way to make your company’s profits go further. Read Retirement Plan Design: One Size Does Not Fit All to learn more about how a retirement plan might help bolster your business’s growth strategy.
  2. You have a SEP Plan with more than two employees. If you haven’t made time to speak with a retirement plan specialist recently to make sure that your retirement plan still addresses your company’s unique needs, there’s a chance you are missing out on a more cost-effective solution. Your retirement plan team can quickly run some illustrative numbers to compare your SEP against a 401(k) plan to reveal whether a better option exists for your business.
  3. You are a business owner who is able to maximize deferrals every year with a SIMPLE IRA. If so, it may be time to consider a Safe Harbor 401(k) plan in 2016 for additional tax deferral. For more insight into how this option can work for you, read Safe Harbor 401(k) Plans Provide Smooth Sailing.
  4. You have a 401(k) but receive corrective distributions every year. You may be missing out on a retirement plan design that can not only alleviate this problem, but can help you maximize the benefits your business receives for being active participants in your employees’ retirement strategy. Access Safe Harbor FAQ here.
  5. You maximize deferrals every year under your Safe Harbor 401(k) plan but offer no profit sharing option. A better plan design for business owners in this situation might be to maximize profit sharing contributions while limiting the amount that has to be provided to employees. For example, cross-tested profit sharing plans may save you money if your company’s staff consists primarily of younger employees. A retirement plan expert can help you identify a plan that helps address the uniqueness of your business.
  6. You are maxing out your profit sharing plan every year. It’s time to add a cash balance option to your existing retirement plan. This is a great option for business owners in this position, because it allows for much higher employer contribution deductibles for owners. Click here to learn more about how these plans can help your business.

Take control of your retirement plan today. Email a Rea & Associates retirement plan expert to find out what you have been missing.

By Steve Renner, QKA (New Philadelphia office)

Check out these articles for more helpful retirement plan advice specifically for small and midsize businesses.

Like Losing Your Wallet – Only Worse
Retirement Roulette
The ‘Van Halen’ Philosophy of Retirement Plan Compliance

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Six Things 401k Plan Sponsors Need To Do Now

Friday, January 16th, 2015
2015 Retirement Plan Deadlines - Ohio CPA Firm

Mark your calendars and don’t forget these 2015 retirement plan deadlines. Click on the image to easily see what is due and when to file.

January may be flying by, but the New Year is still fresh. This is still a great time to make sure that the qualified 401k plan you offer your employees helps them effectively save for retirement and remains qualified. Not sure where to start? Here are six ways to get the most out of your 401k plan:

1. Review Your Match Formula

An employer match can be critical to helping your employees meet their retirement goals and stretching the match formula is a great way to entice employees to save more. Instead of matching 100 percent on the first 2 percent of deferrals, consider changing your contribution formula to 50 percent on the first 4 percent of deferrals, or 25 percent on the first 8 percent of deferrals instead. Each one of these formulas will result in a 2 percent wage cost to you, the employer, but changing the formula may encourage additional employee saving. Instead of saving 4 percent of their income (2 percent employee income plus 2 percent employer match), the employee may be motivated to increase contributions to their retirement plan to 10 percent (8 percent employee income plus 2 percent employer match). Contact your TPA to discuss different strategies.

2. Check Your Contribution Limits

Did you know that the 401(k) and 403(b) plan deferral limits have increased to $18,000? Employees older than 50, now have the option to defer an additional $6,000 of their wages toward retirement. Encourage your employees to review their payroll deduction to ensure that they are on target to meet their personal savings goals.

3. Offer Your 401(k) Plan To All Eligible Employees

If your 401(k) plan has an entry date of Jan. 1, be sure all newly eligible employees were provided the opportunity to participate in the plan. Even if you have an employee who doesn’t want to participate, I recommend that you obtain a signed election form that indicates a 401(k) election of “0 percent.” By doing this, you have documentation that they employee was offered the chance to participate, even though they decided not to.

4. Provide Employee Census To Your TPA

Your third party administrator (TPA) needs yearly plan census information to conduct compliance testing, verify 401(k) and to calculate matching contributions and profit sharing allocations. The deadline for most compliance tests is March 15.

5. Check Your Fidelity Bond

The Employee Retirement Income Security Act (ERISA) requires a fidelity bond for every plan fiduciary and for those who handle the funds or property of a plan. The bond must be at least 10 percent of the company’s plan assets. It’s a good idea to ensure that your bond is still meeting the 10 percent minimum requirement.

6. Restate Your Plan Document

Prototype documents for 401(k) plans currently are in a restatement window; therefore, if your plan uses a prototype document, it must be updated to meet new IRS standards. This document restatement period is a great time to examine your plan provisions. For example, do you want to change eligibility requirements or add a loan provision that you have contemplated adding in the past? This is a good time to make those changes. The deadline for restating 401(k) prototype documents is April 30, 2016. Managing your company’s retirement plan can be confusing or overwhelming at times, but it doesn’t have to be. Email Rea & Associates today to learn more. By Steve Renner, QKA (New Philadelphia office)

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