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401k safe harbor
There are several problems associated with the 401K adoption which makes one feel to get away from implementing 401K plans like for example as the rule , 401k plan is required to satisfy several non-discrimination requirements. These non-discrimination requirements are bit difficult for several small businesses and so they don't to adopt such plans. In order to encourage 401k plans adoption, the Small Business Job Protection Act of 1996 gave the option of 401k plans with several alternative, simple procedures in order to meet the non-discrimination requirements. Thus the 401K plan which came out as an alternative to several other methods is called "safe harbor 401k" plans. 401K safe harbor plan can be adopted by sole proprietorships, partnerships, limited liability companies along with other corporations. Thus it is a type of plan for all. In case of 401K safe harbor plan, employer is having the option to sponsor other qualified retirement plans as well. When talking about the contribution in this plan, the contribution from both the employer as well as employee is possible. The best part of 401K safe harbor plan is that it is very cost effective and its costs lie between low to medium. Thus it is quite easy to adopt this plan especially considering the cost issue. The maximum employee deferral contribution in case of 401K safe harbor plan is the lesser of ,500 for the year 2008 or 100% of compensation. It is a fact that the Safe Harbor 401k is quite similar to the traditional and old plan, however there are certain exceptions to this plan as there are no provisions stating the compulsion of fulfilling every statutory compliance as well as the testing that is generally required to be completed every year. The plan of 401K Safe harbor is regarded as the most beneficial for the small businesses that are able to generate the regular income and in addition are thus able to contribute a desired amount every year to the fund of an employee. On the part of employers it is must to contribute a minimum of 3 percentage of the contribution to each and every employee who is eligible for funding at the time of retirement, irrespective of the point that factor that whether an employee is able to contribute in the fund or not. Thus here the liability of the employer is more and is not depending upon any contribution of the employee. In addition, it is also important to note that it is stated in the provisions that the contribution of the employer to the fund should not vary for the less highly paid employees to a great extent. The employee's rate of contribution can be as much as 2% from the well paid employee. The best part of the 401K safe harbor is that it is very simple to accomplish and administer as well and that is the reason why it is gaining popularity.
Dying Pensions
I often hear and talk with my husband,the actuary, about the Pension Protection Act that masqueraded as something to protect pension plans. While I was with Kelly at an MRI Diagnostics place today I was looking through a Time Magazine and came across an article in which this came to my attention. Its too bad the congress that passed PPA didnt get this message before. null
No Benefit in Union Pension Activism
by Brad Peck As reported by Reuters, the U.S. Chamber released a study today by Navigant Consulting showing that shareholder activism by union pension funds provides no benefit for pension plan participants, and may actually reduce shareholder value at targeted companies. From the article: Amid debate about how much say investors should have in corporate governance, the study found that shareholder attempts to use a company's proxy ballot as a reform tool did not result in a higher stock pric
Ten Steps to Save Your Retirement
Ten Steps to Save Your Retirement 22Jul08 Many of the brightest and hardest-working marketing and advertising people in the country are obsessed with getting you to spend money and, if necessary, to go into debt to do so. Absolutely all the media that reach you every day are designed to get you to spend money. In order to save money in this environment, you will need determination to withstand the constant pressures to spend now. What is it that separates those who are successful from th
There are several options available where one could leave his/her assets with his/her previous employer. In case of 401K safe harbor plan, employer is having the option to sponsor other qualified retirement plans as well. It is an indication that the employee is leaving or getting apart from his/her job and is now taking away all the retirement assets with him/her. Nearly, all companies to control and lookout all the work of administration and tax filling tie up with a third-party pension firm or financial institution merely by providing basic administration fee. |
