When to Deposit Participant Contributions and Loan Payments

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Late deposits of participant contributions and loan payments can be costly to correct and may increase the chances of a Department of Labor (DOL) audit. Late deposits are considered a “prohibited transaction” subject to excise tax and may be considered a breach of fiduciary duty. The DOL has wide latitude to impose civil penalties.   […]

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Why a 401(k) Loan May Not Be a Good Idea

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When a participant borrows against his/her retirement plan balance, investments are sold to generate cash to fund the loan. As a result, the participant is missing out on investment returns while the loan is outstanding. Paying yourself (i.e. your 401(k) account) interest on the loan is not an investment strategy. In fact, it can be […]

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Tips for Preventing Beneficiary Disputes and Liability

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Upon the death of a participant, it’s important to determine the rightful beneficiaries based on the deceased participant’s current beneficiary designation.  To prevent problems, here are some operational steps to consider: 1. Remind employees to update beneficiary designations periodically, particularly upon life-changing events. 2. Re-solicit updated designations from employees on a periodic basis. 3. Communicate a clear process […]

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