Employee Benefit News (View Older Articles)

Pension Protection Act of 2006.  PPA made several significant changes.  There is significant impact on 401(k) as well as pension plans.

Cash Balance Plans.  PPA cleared up much of the concern over cash balance plans.  We have been installing these plans for years with great success.  These plans offer allocation formulas similar to new comparability profit sharing plans as well as contribution amounts which can significantly exceed the limits applicable to profit sharing plans.

IRS Amendment Requirement for Final Regulations under 401(k)/(m).  The deadline to amend plans for the final regulations under 401(k) and (m) is generally the last day of the 2006 plan year.  Failure to adopt a timely amendment will violate the tax-qualification requirements and will require correction under the IRS correction programs.

Roth 401(k) Changes Effective for 2006.  Plans can implement a ROTH feature in a 401(k)/403(b) plan effective as of January 1, 2006.  This article also includes a discussion of when ROTH makes sense for an individual participant. Check back for updated information.

Meeting Your Fiduciary Responsibilities.  The DOL published a brochure which provides a good overview of the responsibilities of plan fiduciaries.  The brochure addresses the duty to: (i) prudently select and monitor service providers; (ii) carefully evaluate fees; and (iii) inform participants.  This is recommended reading for all plan fiduciaries.

Administrator’s Notes: Require and Maintain Participant Beneficiary Designations.  By: Lynda Morrison.  Failing to gather and retain effective beneficiary designations can lead to significant administrative problems in the future.

Qualified Plan Possibilities for Self-Employed Individuals:
The 'Uni-K' and Beyond.  Tax-qualified plans present self-employed individuals significant options.  Careful consideration of all options should be given before any action is taken.

Defined Benefit Plans vs. Cross-Tested Defined Contribution Plans.  By: George M. Morrison.  In recent years, new comparability (or cross-tested) defined contribution plans have become extremely popular.  In jumping to these plans, many employers overlook the options existing under traditional pension plans.

Top-heavy 401(k) Plans: Design Options.  By: George M. Morrison.  Employers facing top-heavy status should reconsider the plan's design considering 401(k) safe harbors and/or new comparability profit sharing allocations.

Administrator Notes: Limiting the Number of HCEs.  In this article, Lynda Morrison addresses an often-overlooked provision that permits employers to limit the number of employees classified as highly compensated employees.