Top Heavy Plan Basics

What are the top heavy rules?

In general, a defined contribution plan (i.e. 401(k), profit sharing, money purchase, etc.) is considered to be top heavy when more than 60% of plan assets are attributable to "key employees" as of the "determination date". Top heavy plans are subject to certain minimum contribution and vesting requirements.


IRS Issue Guidance for Plan Corrections

IRS Provides Welcome Relief for Plan Sponsors!

Mistakes happen! It is inevitable because the rules governing retirement plans are complex and always changing. The IRS Employee Plans Correction Resolution System (EPCRS) has done wonders in allowing plan sponsors to correct mistakes, often without seeking approval from the IRS, and avoid costly sanctions and fines.

On March 27, 2015 the IRS released Rev. Proc. 2015-27 which was immediately followed by the release of Rev. Proc. 2015-28 on April 2, 2015. Collectively, the two new procedures make welcome changes to EPCRS which can result in significant cost savings for employers.


Plan Compensation - Not So Simple!

Plan Compensation – Not So Simple!

At face value, it seems like "compensation" would be one of the simplest issues to deal with in a retirement plan, but it is actually one of the most complex. Understanding what compensation is "plan eligible" is one of the biggest headaches for plan sponsors and an area in which plan sponsors often make mistakes.


If you just think about all of the different forms of compensation you pay your employees (i.e. bonuses, commissions, fringe benefits, paid sick time, vacation time, automobile allowance, severance pay, group term life in excess of $50,000, etc.), it becomes clear why this is such a complex issue!


Payment of Plan Fees and Expenses

What fees and expenses can be paid for by a plan? 

In general, fees and expenses associated with the on-going administration of a retirement plan may be paid from plan assets provided they are necessary and reasonable. Certain expenses known as "settlor" expenses, however, cannot be paid for from plan assets.


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