We knew it was close, now
it's time to consider better options for your retirement plan with your plan
document restatement!
AllianceBenefit Group North Central States, Inc. sponsors a pre-approved plan document
and therefore it is likely that your retirement plan document is subject to an IRS mandatory restatement. This IRS mandatory restatement
is referred to as the PPA restatement due to the Pension Protection Act and has
a 2 year window for restatement that is open now and will end on April 30,
2016.
Since
your plan needs to be restated anyway, now would be a great time to add some additional
features without incurring additional amendment charges. Some examples of items to consider are as
follows:
· Does your plan offer Roth
deferrals? These are after tax dollars that can be deferred
into the plan and could be beneficial to some of your employees. Providing the flexibility to manage their own
distribution tax risk is an important feature for some plan participants and
may encourage participation. For some
employees, adding Roth offers the equivalent of an increase to the 402(g)
contribution limit since the taxes have already been paid.
· Do you want a retirement plan
that provides a high level of participation? An
automatic enrollment plan may be right for you. There are different options to choose from when adding this feature:
1) A basic automatic enrollment
401(k) plan must state that employees will be automatically enrolled in the
plan unless they elect otherwise and must specify the percentage of an
employee's wages that will be automatically deducted from each paycheck for
contribution to the plan. The document must also explain that employees have
the right to elect not to have salary deferrals withheld or to elect a
different percentage to be withheld.
2) An eligible automatic
contribution arrangement (EACA) is similar to the basic automatic enrollment
plan but has specific notice requirements. An EACA can allow automatically
enrolled participants to withdraw their contributions within 30 to 90 days of
the first contribution.
3) A qualified automatic
contribution arrangement (QACA) is a type of automatic enrollment 401(k) plan
that automatically passes certain kinds of annual required testing. The plan
must include certain features, such as a fixed schedule of automatic employee
contributions, employer contributions, a special vesting schedule, and specific
notice requirements.
· Are there any other features
that you would like to consider for your plan? Now
is the time to discuss your questions and concerns with your advisor and/or
your administrative team at Alliance Benefit Group.
If
Alliance Benefit Group North Central States is not your document provider, you may want to discuss
these options with the party responsible for providing that for your
plan. ABGNCS will need a copy of your
document once it is restated so that we can update our recordkeeping software
with any changes.
Be
sure to let ABGNCS know if you have any questions. We’re here to help!
The Author: Babette Engebretson, QPA, QKA
Compliance Supervisor
bengebretson@abg-mn.com
Disclaimer: This blog is of an informative nature and should not be taken as advice. Please work with the appropriate parties for those services.
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