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The safe harbor 401(k) plan roared onto the scene in 1998 as a new design that allowed company owners and other highly compensated employees to maximize their salary deferrals even when other employees contributed at relatively low levels. Over the last 16 years, these plans have continued to evolve through a series of new laws and IRS pronouncements.

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Dec2013

Down with DOMA

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Signed into law in 1996, the federal Defense of Marriage Act (DOMA) is a small law that has caused big controversy…While many have considered the recognition of same-sex marriage to be primarily a social issue, the Windsor decision and subsequent agency guidance have a direct impact on the day-to-day operations of qualified plans.

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As the national economy continues its recovery, more and more businesses are beginning to see their financial situations improve to near pre-recession levels. Companies that have not thought about making profit sharing contributions for years are starting to consider their options.

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In today’s business climate, it seems it is becoming increasingly common for businesses of all sizes to be structured using multiple companies…Regardless of the reason for structuring a business in this way, there are some complex IRS rules that must be considered when it comes to the retirement benefits being offered.

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The economic environment of the last few years created financial challenges for individuals and businesses alike. Even though the worst of the recession appears to be behind us now, some of those financial challenges have had a ripple effect that continues to show itself.

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At some point, almost every company that sponsors a retirement plan will experience the “fun” of tracking down a missing participant in order to pay a benefit. Although difficult to avoid completely, there are steps employers can implement as part of normal operations that can greatly minimize the headache.

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ASPPA’s Government Affairs Committee has received numerous reports of employers receiving proposed late filing penalty notices for Form 5500 from the IRS when, in fact, the employer had timely prepared and filed Form 5558 to extend the deadline

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Dec2012

The IRS Meets Letterman

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Anyone who has ever watched late night television is familiar with the ubiquitous Top 10 List, counting down humorous examples of whatever is in the news. Not to be upstaged, the IRS has its own Top 10 List–the top 10 plan compliance failures found in voluntary correction filings.

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There are few things that will give a person that sinking feeling in the pit of their stomach like opening the mailbox and seeing an envelope with the words “Internal Revenue Service” (or Department of Labor) in the return address. It is similar to seeing that police car as you drive down the highway; you might not even be speeding, but you immediately slow down and wonder how you will look in stripes.

The IRS and DOL both have jurisdiction over qualified retirement plans, and between the two agencies, they generally audit more than 20,000 plans each year. And, if recent speeches and articles are any indication, both agencies will be visiting even more plan sponsors in the months ahead.

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There are many reasons for the wide popularity of 401(k) plans, one of which is that they shift the funding burden from employers to employees. But this advantage may be diminished for plans classified as “top heavy” where special contribution rules kick in that plan sponsors may not be aware of…

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