What is a cross-tested plan? A cross-tested plan is a defined contribution plan that uses a certain testing method to show that the plan does not discriminate in favor of highly compensated employees. To be entitled to favorable tax treatment, a qualified retirement plan cannot discriminate in favor of highly compensated employees (HCEs). An individual is generally a highly compensated employee for a particular year if the individual earned over a certain dollar amount in the

When it comes to deciding on a retirement plan, there are many choices, yet, one plan that is increasing in popularity is the cash balance plan. Compared to traditional 401(k) retirement plans, cash balance plans come with a twist and numerous benefits that you may not have been aware of. In this week's blog, let's take a look at the six things you may not know about cash balance plans. 1. Significant Tax Benefits Cash balance plans can bring tax benefits to the company. Whe

It is no secret that a corporate 401(k) plan provides many benefits to both employers and employees. But what is perhaps lesser known is that how that plan is designed has a huge impact on the resulting benefits. Business owners must identify the features and options they want to see in a plan before sitting down with an administrator. Owners should consider the needs of their employees when designing a plan. When owners include their employees’ wishes in their planning, they

One of the most popular 401(k) Plans, Safe Harbor is great for owners and employees alike. The Safe Harbor plan design allows business owners to provide retirement benefits to their employees while simultaneously ensuring they can save at the maximum rate allowed by the IRS. While Safe Harbor plans offer many benefits, there are strict rules that must be followed and some potential drawbacks that must be considered. In this post, we will provide you with information that may

Someone with discretionary authority over an organization’s 401(k) plan administration, is considered a “Fiduciary.” A fiduciary has many administrative responsibilities and must perform them with diligence and prudence. They are responsible for acting in the best interest of plan participants and beneficiaries, and as such, they are held to very strict standards of conduct. Failure to understand these responsibilities can lead to administrative errors which can result in per

The Coronavirus Aid, Relief, and Economic Security (CARES) Act and other COVID-19-related laws were passed in late March 2020. Not only were $2 trillion of economic stimulus dollars made available to private citizens and small businesses, but some temporary rules were implemented for retirement plans which, for a time, will have an impact on how these plans are administered. In this post, we will give an overview of the changes stemming from these new rules. The CARES Act al