Throughout September, we’ve been celebrating 401(k) Day, sharing retirement plan reminders and best practices.
Consider a safe harbor plan.
National 401(k) Day on September 10 (always the Friday after Labor Day) had us thinking about a specific type of retirement plan that’s a great option for many businesses — a safe harbor 401(k). One of its benefits is that it allows a plan sponsor to avoid some of the most important discrimination tests applied each year.
Timing-wise, participants need to receive a safe harbor notice 30 days before the beginning of the plan year. For this year, the safe harbor provision would need to be in place no later than November 30 for a calendar-year plan — so you may have already missed the window for a 2021 safe harbor plan. But you can set one up for 2022.
Shore up your plan census data.
One of the best ways to dot the i’s and cross the t’s on a retirement plan is to make sure census data is accurate and ready to hand off to the third-party administrator (TPA) within 4–6 weeks after the close of the plan year.
Read Senior Retirement Plan Consultant Candis Bellin’s informative article, Retirement Plan Census Data – It’s Foundational and Fundamental, for reminders about the importance of census data and how to make the annual process easier for you (and your TPA) each year.
Include an automatic-enrollment feature in your retirement plan.
With auto-enroll in place, employees won’t be able to sit around waiting to enroll in the plan someday. (Say goodbye to procrastination.)
Here’s another fun fact: Auto-enroll plans enjoy about an 87% participation rate, while those without it see an average of only 60% of employees in the plan. And research shows most employees you auto-enroll stay enrolled — and this helps them remain focused on setting aside money for retirement.
Read Definiti’s ERISA Connection quarterly commentary.
Keeping up with retirement plan news, such as regulatory updates from the IRS and Department of Labor, is almost a full-time job. But doing that is all in a day’s work for Definiti — especially for our ERISA attorneys, including Brooke K. Cozort, JD CPC. She writes our ERISA Connection commentary published several times a year.
When you view the ERISA Connection archive, you’ll find a wide range of topics, including CARES Act updates, provisions for partial plan terminations and more.
Interested in safe harbor, auto-enroll or another plan enhancement?
We’re here to help! Reach out to your Definiti retirement plan consultant, contact a member of our sales team at 1-888-912-3653 or email sales@definiti-llc.com.
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This material has been prepared for informational purposes only, and is not intended to provide legal, tax or investment advice. Any tax-related discussion contained in this material is not intended or written to be used, and cannot be used, for (i) avoiding any tax penalties, or (ii) promoting, marketing or recommending to any other party any transaction or matter addressed herein. This material does not provide fiduciary recommendations concerning investments or investment management; it is not individualized to the needs of any specific benefit plan or retirement investor, nor is it directed to any recipient in connection with a specific investment or investment management decision. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.
This information is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this article without first seeking the advice of an independent tax advisor such as an attorney or CPA.
