ThompsonKnight Avoiding Issues in Audit

SalmonSimsThomas Stay out of the DOL spotlight

SalmonSimsThomas Stay out of the DOL spotlight

JacksonWalker 401(k) PlanMistakes

Legg Mason Understanding Fee Disclosure

A failure to timely remit contributions and loan repayments

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Problems with Discrimination Read the rest of this entry »

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IRS Tax Tip 2010-32

Some taxpayers may have needed to take an early distribution from their retirement plan last year. The IRS wants individuals who took an early distribution to know that there can be a tax impact to tapping your retirement fund.  Here are ten facts about early distributions.

1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions.
2. Early distributions are usually subject to an additional 10 percent tax.
3. Early distributions must also be reported to the IRS.
4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.
5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.
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The Department of Labor (DOL) recently sent formal Notice of Rejection (NOR) letters to approximately 370 plan administrators of large plans (based on plan asset size) that failed to attach an audit report to their 2008 Form 5500. The DOL anticipates sending additional NOR letters to smaller plans in the future for missing audit report. These large plans were determined based on the size of their assets in the plan. The DOL anticipates sending a second wave of letters in the near term to the next tier plans based on the size of assets in the plan.

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This is Part 2 in our series Five Ways to Lose Your Tax Exempt Status.

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If your benefit plan was audited, then you likely spent hours going through files pulling basic information for your auditors. You may have pulled files from storage or from different offices. Worse, you may have educated your plan auditors on the basics of the plan when they had a plan document and summary plan description to read, which you gave them. You may have even found yourself researching payroll records for various employees for the entire fiscal year to determine why their employee contributions are different than the ones calculated by the auditors. Read the rest of this entry »

One of the surest ways to sow discord among employees is to cause them to have a large unexpected tax bill. This type of blunder will likely get a similar response to not making payroll. The maintenance of the tax exempt status of 401(k)’s requires some effort but prompt and appropriate action will prevent an unwanted exodus of personnel. The following mentions common plan issues that have tax implications and some useful tips for staying out of trouble. Read the rest of this entry »