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Adding In-Service Distributions to a Company’s Retirement Plan

“What are the considerations around adding an in-service distribution option to a company’s qualified retirement plan?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from New Jersey is representative of a common inquiry related to in-service distributions from qualified retirement plans.

Highlights of the Discussion

There are several important considerations surrounding adding an in-service distribution option to a company’s qualified retirement plan, including, but not limited to,

  • Type of plan,
  • The process to add,
  • The parameters for taking,
  • Potential taxes and penalties to recipients,
  • Nondiscrimination in availability, and
  • The effect on top-heavy determination.

Several types of retirement plans can offer in-service distributions, including 401(k), profit sharing, employee stock ownership and even defined benefit plans. If a plan sponsor desires an in-service distribution option, it must be formally written into the plan document, either when adopted or later through a plan amendment. The plan sponsor would need to check with its document provider for the exact adoption or amendment steps. For example, adding an in-service distribution option to a prototype 401(k) plan can be as easy as checking a box on the adoption agreement, selecting an effective date, signing the amendment and notifying participants of the change.

There are pros and cons to including an in-service distribution option in a plan. The pros include increased participant control of plan assets, and a higher level of participant satisfaction with the plan. The cons include the potential for greater administrative burdens and cost to the plan sponsor as a result of an increase in the number of distribution requests, potential taxes and penalties for the distribution recipient, and depletion of savings meant for retirement income.

Plan participants need to understand the taxation rules that apply to in-service distributions. Any pre-tax amounts that are distributed from a plan prior to age 59½ will be subject to taxation and, possibly, an early distribution penalty tax, unless an exception applies. Completing a rollover of the in-service distribution either directly or indirectly within 60 days of receipt is one way to delay any tax impact.

If a plan sponsor wants to add an in-service distribution option, it can choose to make the option very liberal or attach restrictions such as a requirement for a participant to reach a certain age, or complete a set amount of service. It is important to note that the IRS does not allow employee pre-tax elective deferrals to be distributed prior to age 59½, nor defined benefit assets to be distributed prior to age 62 under the in-service distribution rules. The plan sponsor could also limit access to a particular contribution source or sources (e.g., matching contributions, after-tax, etc.).

Distributions are part of the benefits, rights and features of a plan under Treasury Regulation §1.401(a)(4)-4. Therefore, if a plan offers in-service distributions, it must do so in a nondiscriminatory manner (i.e., not make them disproportionately more available to highly compensated employees (HCEs) than nonHCEs).

Finally, keep in mind that in-service distributions from a qualified retirement plan can affect top-heavy determination for up to five years. A plan is top-heavy if the key employees own more than 60 percent of the plan’s assets or benefits on the determination date. In-service distributions for active employees are added back to account balances if the distribution occurred within the five-year period ending on the determination date (Treasury Regulation §1.416-1, T-30)).

Conclusion

When the desire to give plan participants greater control of their plan assets exists, plan sponsors and participants may look to in-service distributions of retirement plan assets as a possible solution. But there are several important considerations surrounding such a plan feature. Financial advisors can help educate their clients on the pros and cons of adding, or changing the terms of an existing, in-service distribution option.

 

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Tax Reporting of Retirement Plan Contributions for Unincorporated Businesses

“Tax season has me wondering how sole proprietors deduct contributions they make to their qualified retirement plans?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.

A recent call with a financial advisor from Oklahoma is representative of a common inquiry related to deducting retirement plan contributions.

Highlights of the Discussion

Unincorporated business owners, such as sole proprietors, farmers and partnerships, are among the IRS’s list of “pass through” business entities. Why the name—because the profits of these firms directly pass through the businesses to their owners, and are taxed on the owners’ individual income tax returns.

Special rules apply for how such businesses report and deduct contributions to their retirement plans for themselves and their employees. The following table provides a general, informational summary of annual tax reporting requirements for unincorporated business owners who make retirement plan contributions. The table is based on the instructions to the filing forms noted. IRS Publication 560, Retirement Plans for Small Businesses provides additional information. Please consult a tax advisor for specific guidance.

Tax Reporting of Retirement Plan Contributions for Unincorporated Businesses

Type of Employer Contributions for Common Law Employees Contributions for the Business Owner
Sole proprietorship Line 19 of 2018 Schedule C, Profit or Loss From Business (attachment to IRS Form 1040)

 

Instructions to Schedule C

 

Line 28 of 2018 Schedule 1, Additional Income and Adjustments to Income,(attachment to IRS Form 1040)

 

Instructions for Schedule 1

 

Farmers Line 23 of 2018 Schedule F, Profit or Loss From Farming, (attachment to IRS Form 1040)

 

Instructions to Schedule F

 

Line 28 of 2018 Schedule 1, Additional Income and Adjustments to Income, (attachment to IRS Form 1040)

 

Instructions for Schedule 1

 

Partnership Line 18 of 2018 Form 1065, U.S. Return of Partnership Income

 

Instructions to Form 1065

 

Box 13 of Schedule K-1 Partner’s Share of Income, Deductions, Credits, etc. (attachment to Form 1065)

 

Instructions for Schedule K-1

 

 

 

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Proxy voting on securities held in qualified plans

“Who or what entity is responsible for proxy voting[1] on securities held in a qualified retirement plan?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from Texas is representative of a common inquiry related to stock or securities held in an employer-sponsored retirement plan.

Highlights of the Discussion

For the definitive answer, one must turn to the language of the governing plan document. The responsible party will be different depending on whether the plan specifies that plan investments are directed by 1) the plan participant; 2) a discretionary trustee; 3) an ERISA 3(38) investment manager; or 4) plan administrator or other named fiduciary. The DOL issued guidance on this matter in Interpretive Bulletin (IB) 2016-01.

In plans where investments are participant-directed, a plan participant has the responsibility to direct the trustee as to the manner in which any voting rights should be exercised. Assuming the plan participant timely received all notices, prospectuses, financial statements and proxy solicitation, the terms of the plan document should address who or what entity assumes the voting responsibility when participants fail to give instructions. For example, many plan documents will specify the plan trustee as the entity to vote in lieu of receiving participant instructions. Alternatively, the plan may specify another plan fiduciary such as an investment manager.

In some cases, the plan trustee, who has investment discretion, has the obligation to vote proxies on securities held in a qualified retirement plan. That responsibility is an extension of the trustee’s fiduciary responsibility to prudently manage plan assets in the best interest of plan participants. However, if the trustee is a directed trustee (i.e., subject to the direction of a named fiduciary), then the named fiduciary would retain the responsibility for the voting of proxies.

The plan document may specify that an ERISA 3(38) investment manager is responsible for directing investments, including the responsibility for proxy voting. If the plan document or investment management agreement provides that the investment manager is not required to vote proxies, but does not expressly preclude the investment manager from voting proxies, the plan’s investment manager has exclusive responsibility for voting proxies. However, if the plan document or investment management agreement expressly precludes the investment manager from voting proxies, the plan’s discretionary trustee has exclusive responsibility for voting proxies.

IB 2016-01 is clear that the investment policy statement for the plan should include a statement of the plan’s proxy voting policy. An IPS is a written statement that provides fiduciaries responsible for plan investments with guidelines or general instructions on investment management decisions.

Conclusion

For guidance on the individual or entity responsible for the voting of proxies for securities held in a 401(k) plan—turn to the governing plan documents. Proxy voting is a fiduciary responsibility. The authority for proxy voting should be addressed in the plan document and the procedure outlined in the plan’s IPS.

[1] A way for shareholders to vote on matters affecting a company without having to personally attend the meeting.

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What is an 83(b) election?

“One of my 401(k) clients also has some restricted stock awards from his employer.  He is asking me about an 83(b) election.  What is an 83(b) election?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.

A recent call with a financial advisor from California is representative of a common inquiry related to restricted stock awards.

Highlights of the Discussion

An Internal Revenue Code Section (IRC §) 83(b) election is a tax tool relating to the transfer of property in connection with the performance of service. It provides an option to change the standard tax treatment of restricted stock grants and is typically used in start-up companies.

With restricted stock, employees are given shares or the right to purchase shares (sometimes at a reduced price), but they cannot take possession of the shares until they meet certain requirements (or the restrictions are lifted). Restrictions can include working for a set number of years, or meeting specified performance goals. The restrictions can phase out or cease immediately. While the employee holds the restricted stock, it may or may not provide dividends or voting rights.

There is some flexibility regarding taxation with restricted stock grants. Employees can choose whether to be taxed when the restrictions lapse or when the right is first granted. If taxation occurs when the restrictions lapse, employees will pay ordinary income tax on the difference between the current price and anything they may have paid for the shares.

Taxation upon grant for restricted stock may occur only if the individual files an IRC §83(b) election.[1] In that case, he or she pays tax on the difference (if any) between the current price and the purchase price at ordinary income tax rates, and then pays capital gains tax when he or she actually sells the shares. Thus, the value of property with respect to which this election is made is included in gross income as of the time of transfer, even though such property is not yet vested at the time of transfer.

An 83(b) election carries some risk. If an employee makes an election and pays tax, but the restrictions never lapse, the employee does not get a refund of the taxes paid, nor does the employee get the shares.

In Revenue Procedure 2012-29, the IRS presents some sample language that would satisfy the IRS regulations for making an 83(b) election. In addition, the Revenue Procedure 2012-29 provides examples of the tax results that may occur as a result of an IRC § 83(b) election.

Conclusion

An 83(b) election is a tax tool. An individual who receives restricted stock awards will want to discuss with his or her tax advisor whether making an 83(b) election makes sense given the individual’s unique financial situation.

[1] Note that recipients of restricted stock units are not allowed to make IRC §83(b) elections.

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How is it possible to make a $27,000 IRA contribution by April 15, 2019?

“A colleague of mine said a 60-year-old client couple of his just made a $27,000 IRA contribution. How is that possible without creating an excess contribution?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from Massachusetts is representative of a common inquiry related to IRA contributions.

Highlights of the Discussion

There is a window of opportunity from January 1 through April 15, 2019, for a married couple to be able to contribute up to $27,000 at one time to their IRAs. Sizeable contributions like this are possible each year during tax season because of the carry-back and current-year IRA contribution rules, combined with the catch-up contribution limits for those ages 50 or more.

Here’s how it breaks down. From January 1 to April 15, 2019, it is potentially possible for a traditional or Roth IRA owner age 50 and over to contribute $6,500 as a 2018 carry-back contribution, and $7,000 as a 2019 current year contribution, for a total of $13,500.[1] That means a married couple filing a joint tax return could potentially make combined IRA contributions totaling $27,000, with $13,500 going to each spouse’s respective IRA.

Please be aware of the caveats. Such a large contribution would only be possible if the couple

  • Had not previously made 2018 contributions to traditional or Roth IRAs;
  • Each spouse was age 50 or greater as of December 31, 2018;
  • The couple has earned income to support the contributions;
  • For a Roth IRA contribution, had modified adjusted gross income (MAGI) under the limits for Roth IRA contribution eligibility; and
  • For a traditional IRA contribution, was under age 70½. (Whether a couple’s traditional IRA contributions would be tax deductible depends upon the couple’s MAGI and participation in a retirement plan at work. Please see the applicable MAGI ranges below.
Roth IRA Contribution Eligibility 2018 and 2019
Taxpayer Category 2018 MAGI Phase-Out Ranges 2019 MAGI Phase-Out Ranges
Married filing jointly $189,000-$199,000 $193,000-$203,000
Single individuals $120,000-$135,000 $122,000-$137,000
Married filing separately $0-$10,000 $0-$10,000
Traditional IRA Eligibility for Deductible Contributions
Taxpayer Category 2018 MAGI Phase-Out Ranges 2019 MAGI Phase-Out Ranges
Married active participant filing jointly $101,000-$121,000 $103,000-$123,000
Single active participant $63,000-$73,000 $64,000-$74,000
Married active participant filing separately $0-$10,000 $0-$10,000
Spouse of an active participant $189,000-$199,000 $193,000-$203,000

When making IRA contributions during the period between January 1 and April 15th of a given year, it is important for an investor to clearly designate to the IRA trustee or custodian for what year a contribution is being made (e.g., what portion represents a carry-back contribution for the preceding year and what portion represents a current-year contribution) in order to avoid having the full amount treated as a current-year contribution and, subsequently, an excess contribution.

Conclusion

Because of the carry-back and current-year IRA contribution rules, there is a window of opportunity through April 15th that allows eligible investors to double up, seemingly, on IRA contributions. Investors interested in maximizing their contributions in this way should consult their tax advisors regarding their particular circumstances.

 

[1] For eligible individuals under age 50, the maximum IRA contribution limit is $5,500 for 2018 and $6,000 for 2019.

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Relief for delinquent Form 5500-EZ filers

“I have several clients who run owner-only businesses that have 401(k) plans that cover themselves and their spouses. I believe at least some of them should have been filing Form 5500-EZ, Annual Return of a One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan, but have not. Is there a way for them to correct this error without penalty?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from Colorado is representative of a common inquiry related to plan reporting requirements.

Highlights of the Discussion

An owner-only business with a qualified retirement plan that covers the owner, partners and spouses, such as a “solo (k)” or “individual (k),” must begin filing an annual Form 5500-EZ when the total value of the plan assets exceeds $250,000 at the end of the plan year. Regardless of plan asset value, an owner-only business must file a Form 5500-EZ to report the final plan year of the plan (See the Instructions for Form 5500-EZ.)

Initially, the IRS did not provide any penalty relief for delinquent Form 5500-EZ filers. That changed with the IRS’s release of Revenue Procedure 2015-32, which made permanent a 2014 pilot program that allowed owner-only businesses to correct late Form 5500-EZ filings. Without the program, a plan sponsor faces late filing penalties of $25 per day, up to $15,000 for each late Form 5500-EZ, plus interest, and $1,000 for each late actuarial report (for a defined benefit plan, if needed).

The IRS’s Form 5500-EZ Later Filer program is separate from the Department of Labor’s Voluntary Fiduciary Correction Program (VFCP), which is available to late filers of Forms 5500, Annual Return/Report of Employee Benefit Plan. Form 5500-EZ filers do not qualify for the VFCP.

In order for late filers of Form 5500-EZ to qualify for penalty relief, the business owner must meet the following criteria. He or she

  1. Has not been informed of a late filing penalty (i.e., the business owner has not received a CP 283 Notice from the IRS);
  2. Submits all delinquent returns for a single plan together;
  3. Prepares a paper Form 5500-EZ for each delinquent year, including any required schedules and attachments, if any. Use the Form 5500-EZ return that applied for the delinquent plan year. However, if the return is delinquent for a year prior to 1990, use the Form 5500-EZ for the current year (see prior year Forms 5500-EZ);
  4. Writes in red letters at the top of each paper return: “Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief;”
  5. Attaches a completed one-page transmittal schedule (Form 14704) to the front of each late return;
  6. Pays the required fee. The fee is $500 per delinquent return, up to $1,500 per plan. Make checks payable to “United States Treasury;” and
  7. Mails the returns to the following address (Note: Electronically filed delinquent returns are not eligible for penalty relief).

First class mail

Internal Revenue Service

1973 North Rulon White Blvd.

Ogden, UT 84404-0020

Private delivery services

Internal Revenue Submission Processing Center

1973 North Rulon White Blvd.

Ogden, UT 84404

Conclusion

Some owner-only businesses with qualified retirement plans must file an annual Form 5500-EZ. If they fail to do so when required, IRS penalties could result. Since 2015 there has been a permanent penalty relief program for Form 5500-EZ late filers to follow in Revenue Procedure 2015-32.

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Economically targeted investing—ERISA considerations

“A number of my clients have asked about economically targeted investing (ETI). Are there any special considerations of which I need to be aware?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from New Jersey is representative of a common inquiry related to selecting plan investments.

Highlights of the Discussion

Plan fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA) should be aware of the Department of Labor’s (DOL’s) stance and guidance on ETI. First, let’s wrap our heads around what ETI is, and the many names by which it is known.

ETI is a type of investment behavior where an individual or plan committee considers the economic, social and/or corporate governance benefits of an investment, in addition to its propensity for favorable returns, when making investing decisions. Other common names for this behavior include socially responsible investing, sustainable and responsible investing, environmental, social and governance (ESG) investing, green investing and impact investing.

ESG criteria are many and varied. The Forum for Sustainable and Responsible Investment offers the following common examples of ESG criteria, but there are surely others:

Environmental Social Corporate Governance
Water Use & Conservation Workplace Safety Corporate Political Contributions
Sustainable Natural Resources Labor Relations Executive Compensation
Pollution/Toxins Workplace Benefits Board Diversity
Clean Technology Diversity & Anti-Bias Issues Anti-Corruption Policies
Climate change/Carbon Community Development Board Independence
Green Building/Smart Growth Avoidance of Tobacco or Other Harmful Products  
Agriculture Human Rights  

Over the past 35 years, various members of the financial industry have asked the DOL to opine on the use of ESG investments within qualified retirement plans given the constraints of ERISA. ERISA requires plan fiduciaries to make decisions with respect to their plans that are in the best interests of the participants and beneficiaries, with their decisions being held to an expert standard. Selecting and monitoring plan investments is well within this purview.

Through several DOL interpretive bulletins (IBs), culminating with IB 2015-01, the DOL has confirmed its longstanding view that, “… plan fiduciaries may invest in ETIs based, in part, on their collateral benefits so long as the investment is appropriate for the plan and economically and financially equivalent with respect to the plan’s investment objectives, return, risk, and other financial attributes as competing investment choices.” Some have referred to this standard as the “all things being equal” test. Put another way, “Would the investment make the cut as a plan investment using ERISA standards if it were not ESG conscious?”

What about a plan’s investment policy statement (IPS), the written document that provides fiduciaries with general instructions for making investment management decisions? If ESG investing is an objective of the plan, then the DOL deems it appropriate for a plan’s IPS to reference the process and criteria for inclusion of such investments. Moreover, prudence dictates plan fiduciaries maintain records sufficient to demonstrate compliance with ERISA’s evaluation requirements and IPS guidelines.

Conclusion

All things being equal, plan fiduciaries can consider an investment’s ESG criteria as part of an ETI objective as long as the investment otherwise meets ERISA’s best interest and prudent expert standards.

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Deferral limit, multiple plans and excess deferrals

“What is a plan participant’s deferral limit if he or she participates in more than one 401(k) plan?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from Connecticut is representative of a common inquiry related to contribution limits.

Highlights of the Discussion

The IRC § 402(g) annual limit on employee salary deferrals is an individual taxpayer limit—not a per plan limit. Consequently, an individual under age 50 for 2018 was limited to deferring 100 percent of compensation up to a maximum of $18,500 (or $24,500 if age 50 or more)—regardless of the number of plans in which he or she participated during the year. For 2019, the respective limits are $19,000 and $25,000.

This annual limit is inclusive of employee salary deferrals (pre-tax and designated Roth) an individual makes to all of the following plan types:

  • 401(k),
  • 403(b),
  • Savings incentive match plans for employees (SIMPLE) plans [both SIMPLE IRAs and SIMPLE 401(k) plans[1]] and
  • Salary reduction simplified employee pension (SARSEP) plans.[2]

(Note: A person who participates in a 457(b) plan has a separate deferral limit that includes both employee and employer contributions.)

If a taxpayer exceeds the annual limit—the result is an excess deferral that must be timely corrected. The IRS could disqualify a plan for violating the elective deferral limitation, resulting in adverse tax consequences to the employer and employees under the plan. But there are ways to correct the error. It is important to follow the correction procedures contained in the governing plan document.

Generally, if a participant has excess deferrals based on the elective deferrals made to a single 401(k) plan or plans maintained by the same employer, then the plan must return the excess deferrals and their earnings to the participant no later than April 15th of the year following the year the excess was created [Treas. Reg. § 1.402(g)-1(e)(1)].

In the case of an employee who participates in more than one salary deferral-type plan of unrelated employers, it may be difficult for the plan sponsor to recognize there is an excess deferral. Therefore, the onus is on the participant to notify the plan administrator of the amount of excess deferrals allocated to the plan prior to the April 15th correction deadline (usually a notification date is specified in the plan).

[1] The 2018 limit for deferrals to a SIMPLE IRA or 401(k) plan is $12,500 ($15,500 if age 50 or more).

[2] The 2018 limit for deferrals to a SARSEP plan is 25% of compensation up to $18,500 ($24,500 if age 50 or more).

document). The plan is then required to distribute the excess and earnings to the participant no later than the April 15th correction deadline [Treas. Reg. § 1.402(g)-1(e)(2)].

If the excess deferrals are timely withdrawn by the April 15th correction deadline, then

  • The excess deferrals are taxed in the calendar year deferred;
  • The associated earnings are taxed in the year distributed;
  • There is no 10% early distribution penalty tax; and
  • There is no 20% withholding (since the amounts are ineligible for rollover).

If the excess deferrals are withdrawn after the April 15th correction deadline, then

  • Each affected plan of the employer is subject to disqualification and would need to go through the IRS’s Employee Plans Compliance Resolution System (EPCRS) to properly correct the error;
  • The excess deferrals are subject to double taxation—taxed in the year contributed and in the year distributed;
  • The associated earnings are taxed in the year distributed; and
  • The excess deferrals could also be subject to the 10% early distribution penalty tax if no exception applies.

EXAMPLE 1

Joe, a 45-year old worker, made his full salary deferral contribution of $18,500 to Company A’s 401(k) plan by October 2018. He then left Company A to go to work for Company B, an unaffiliated company, on November 1, 2018, and was immediately allowed to participate in the 401(k) plan. Not understanding how the 402(g) limit works, he begins making salary deferral contributions to Company B’s 401(k) plan. In December his financial advisor informed him that may have over contributed for 2018.

The onus is on Joe to report the excess salary deferrals to Company B. Company B is then required to distribute the excess deferrals and earnings by April 15, 2019.  The plan document also requires forfeiture of any matching contributions associated with the excess deferral.

Conclusion

Although the annual IRC §402(g) employee salary deferral limit is an individual employee limit, exceeding it can have consequences for both the employee and the plan sponsor. Timely correction of the excess is key to minimizing possible negative effects.  Plan sponsors should review the correction procedures outlined in their plan documents, and follow them carefully should they detect or be informed of an excess deferral. Also rely on the IRS’s EPCRS corrections program.

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401(k) Record Retention Rules

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401(k) After-Tax Contributions May Be Testy–But Worth It

“What are the limitations, if any, on making after-tax contributions to a 401(k) plan?” Read more

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