Christine Hradsky No Comments

Should Your 401(k) Plan Adopt An Auto-Enrollment Feature?

401(k) Enrollment

Many employers have 401(k) plans with a low participant percentage. Current tax rules make it easy for organization to automatically enroll employees, helping them save for retirement.

Current tax law gives employers encouragement to start automatically enrolling employees for tax-saving 401(k) elective deferral contributions (also called salary reduction contributions). The Pension Protection Act of 2006 removed perceived state-law restrictions and made other changes.

The end result of these changes: Companies adopting auto-enrollment features will have more employees participating. Larger allowable salary reduction contributions can likely be made for higher-paid employees, because lower-paid workers will be contributing more.

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Christine Hradsky No Comments

Uncashed Distribution Checks: Best Practices For Plan Sponsors

Distribution Checks

When employees leave, it can be difficult for benefit plan sponsors to know where to send their information. Follow these best practices for handling such situations.

Defined contribution plan sponsors face numerous challenges when workers change jobs, and the Department of Labor (DOL) is paying close attention to how employers are dealing with these situations.

Often, outgoing workers don’t provide instructions or forwarding information, leaving it up to the plan sponsor to figure out what to do with the assets that are left behind.

From 2004 to 2013, more than 25 million participants in workplace plans left at least one retirement account behind when changing jobs, according to a January report from the Government Accountability Office (GAO). Meanwhile, the DOL estimates that $15 million in distribution checks goes unclaimed each year. Read more

Christine Hradsky No Comments

Congress Raises 401(k) Hardship Withdrawal Limits

401(k) Harship Withdrawal

Restrictions on employee 401(k) hardship withdrawals will be eased next year, thanks to new legislation enacted by Congress in February 2018.

Most 401(k) plans permit hardship withdrawals, though plan sponsors aren’t required to allow them. As it stands today, employees seeking to take money out of their 401(k) accounts are limited to the funds they contributed to the accounts themselves, and only after they’ve first taken a loan from the same account. Loans must be repaid, of course. The theory behind the loan requirement is that employees would be less apt to permanently deplete their 401(k) accounts with hardship withdrawals. Read more

Christine Hradsky No Comments

Know the Rules Before Checking Employee Medical Records

Medical Records

Employers often need to validate health-related time off requests. However, doing so comes with a minefield of regulations to follow.

When employees request time off under the Family and Medical Leave Act (FMLA), employers need to tread carefully.

The FMLA can be a minefield in several ways, including how to document eligibility for leave. In the simple words of the Department of Labor, employees would qualify for time off under the act if a serious condition makes them “unable to perform the functions of his or her job,” or “to care for the employee’s spouse, son, daughter, or parent who has a serious health condition, ” among other reasons.

In its Employer’s Guide to the FMLA, the Labor Department notes that serious health conditions include illnesses, injuries, and physical or mental conditions that require inpatient care or continuing treatment by a health care provider.” It also states that the FMLA doesn’t “apply to routine medical examinations, such as a physical, or to common medical conditions, such as an upset stomach, unless complications develop.” Read more

Christine Hradsky No Comments

Employee Benefit Plans- Cost of Living Update


The Internal Revenue Service has announced the cost-of-living adjustment (COLA) for 2018. The dollar limitations for pension plans and selected other items are displayed in the associated graph. Certain annual compensation amounts were increased, including the limit for elective deferrals, which have not been updated since 2015. The Social Security Administration separately announced an increase to the taxable wage base. Read more