A New Perspective on Student Loan Repayment Benefits

On August 17, 2018, the Internal Revenue Service (the “Service”) published a Private Letter Ruling (the “PLR”) describing a unique student loan repayment program in the context of a qualified retirement plan.

Proposed Student Loan Repayment Program

As described in the PLR, an Employer sponsors a Section 401(k) defined contribution plan that permits elective deferrals. The plan requires the Employer to make a matching contribution equal to 5% of an eligible employee’s compensation for a given pay period if such employee makes an elective contribution of at least 2% of his or her compensation during the same period.

The Employer proposed to amend the plan to incorporate a student loan repayment program (the “Program”). Read More ›

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IRS Provides Relief for Correction of Elective Deferral Mistakes in 401(k) Plans

The IRS recently announced changes that make it significantly easier to correct employee deferral mistakes (also known as elective deferrals) in qualified retirement plans.  The changes make modifications to the IRS’ Employee Plans Compliance Resolution System (“EPCRS”), which is the IRS’ comprehensive correction program for qualified retirement plans.

Automatic Enrollment Correction Relief

If a qualified plan has automatic enrollment and it either (1) does not automatically enroll employees in accordance with the terms of the plan’s automatic enrollment feature or (2) does not implement an employee’s affirmative election, the new guidance provides that as long as the employee is enrolled in the plan within 9-1/2 months following the end of the plan year of the failure (or earlier if the employee notifies the employer of the mistake), the employer is not required to make a correction for the missed elective deferrals.  Read More ›

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IRS Announces 2015 Cost-of-Living Adjustments for Retirement Plans

The IRS recently announced cost of living adjustments for 2015.  The key dollar amounts for retirement plans (compared to the 2014 dollar limits) are noted below.

Maximum Qualified Retirement Plan   Dollar Limits

2015

2014

Limit   on Section 401(k) deferrals (Section 402(g))

$18,000

$17,500

Dollar   limitation for catch-up contributions (Section 414(v)(2)(B)(i))

$6,000

$5,500

Limit   on deferrals for government and tax-exempt organization deferred compensation   plans (Section 457(e)(15))

$18,000

$17,500

Annual   benefit limitation for a defined benefit plan (Section 415(b)(1)(A))

$210,000

$210,000

Limitation   on annual contributions to a defined contribution plan (Section 415(c)(1)(A))

$53,000

$52,000

Limitation   on compensation that may be considered by qualified retirement plans (Section   401(a)(17))

$265,000

$260,000

Dollar   amount for the definition of highly compensated employee (Section   414(q)(1)(B))

$120,000

$115,000

Dollar   amount for the definition of key employee in a top-heavy plan (Section   416(i)(1)(A)(i))

$170,000

$170,000

Dollar   amount for determining the maximum account balance in an ESOP subject to a   five-year distribution period (Section 409(o)(1)(C)(ii))

$1,070,000

$1,050,000

SIMPLE   retirement account limitation (Section 408(p)(2)(E))

$12,500

$12,000

Social   Security Taxable Wage Base

$118,500

$117,000

  Read More ›

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IRS Announces 2014 Retirement Plan Limits

On October 31, 2013, the IRS announced the cost-of-living adjustments that will affect the dollar limitations for pension and other retirement plans for the 2014 tax year.  Notably, the $17,500 annual contribution limit for employees who participate in 401(k) plans remains the same for 2014.

Maximum   Qualified Retirement Plan Dollar Limits

2013

2014

Limit on Section 401(k)   deferrals (Section 402(g))

$17,500

$17,500

Dollar limitation for catch-up   contributions (Section 414(v)(2)(B)(i))

$5,500

$5,500

Limit on deferrals for   government and tax-exempt organization deferred compensation plans (Section 457(e)(15))

$17,500

$17,500

Annual benefit limitation for   a defined benefit plan (Section 415(b)(1)(A))

$205,000

$210,000

Limitation on annual   contributions to a defined contribution plan (Section 415(c)(1)(A))

$51,000

$52,000

Limitation on compensation   that may be considered by qualified retirement plans (Section 401(a)(17))

$255,000

$260,000

Dollar amount for the   definition of highly compensated employee (Section 414(q)(1)(B))

$115,000

$115,000

Dollar amount for the   definition of key employee in a top-heavy plan (Section 416(i)(1)(A)(i))

$165,000

$170,000

Dollar amount for determining   the maximum account balance in an ESOP subject to a five-year distribution   period (Section 409(o)(1)(C)(ii))

$1,035,000

$1,050,000

SIMPLE retirement account limitation   (Section 408(p)(2)(E))

$12,000

$12,000

Social Security Taxable Wage   Base

$113,700

$117,000

If you would like to read the IRS announcement in its entirety, click here. Read More ›

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