Suspend Deferrals After a Hardship Distribution

Situation: Our 401(k) plan allows hardship distributions. We use the tax law’s safe harbor method of determining eligible hardships. We recently received a request for a hardship distribution and want to make sure we comply with all of the requirements. Question: Is there anything we should take particular care with? Answer: In addition to confirming that the distribution…

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Back to Basics: Record Retention

Retirement plans create a massive amount of paperwork. Retirement plan records include basic plan documents and adoption agreements, summary plan descriptions (SPDs), specific information about plan participants and beneficiaries, data needed to perform various tests, the tests themselves, governmental reporting, and contribution and distribution information. The Employee Retirement Income Security Act (ERISA) provides rules for…

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Handling QDROs for Your Retirement Plan

When couples divorce, one spouse’s retirement benefits may be divided as part of a property settlement. Although federal law generally does not allow plan participants to assign or alienate their retirement plan interests, there is a limited exception. Retirement benefits may be assigned to a spouse, former spouse, child, or other dependent to satisfy family…

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When Employees Leave, but Plan Accounts Stay

Work force reductions over the past couple of years have left some employers with a lot of low-balance plan accounts owned by former employees. These accounts can be expensive to maintain and burdensome to administer. Below, you will find answers to commonly asked questions about handling these small accounts. Can we just distribute small accounts…

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Managing the Use of Plan Loans

A plan loan feature can be a useful tool for helping to increase plan participation and contribution rates. Nevertheless, plan loans may impede employees’ efforts toward achieving their long-term retirement goals and complicate plan administration. Following is a general discussion of some of the issues surrounding plan loans and suggestions for addressing them. Understanding the…

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Fidelity Bonding Versus Fiduciary Liability Insurance

Fidelity bonding or fiduciary liability insurance? It’s not an either/or question. Each has its own function in protecting the plan and its fiduciaries against claims for certain plan losses. Below we answer questions plan sponsors may have about fidelity bonding and fiduciary liability insurance. Are retirement plans required to have a fidelity bond and fiduciary…

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