What is a Safe Harbor 401(k) Plan?

Navigating the world of retirement plans can be daunting for employers, especially when it comes to ensuring compliance with IRS non-discrimination rules. For many plan sponsors, Safe Harbor 401(k) plans offer a streamlined path to compliance and a way to maximize benefits for both employees and owners. Understanding the different Safe Harbor plan types is crucial for making informed decisions that meet both regulatory needs and organizational goals.

Understanding Minimum And Maximum Funding Levels For Defined Benefit Plans

Defined Benefit (DB) plans are a cornerstone of retirement planning for many employers and employees. These plans promise a specific benefit amount to participants upon retirement, making them a reliable source of income. However, maintaining a DB plan requires careful attention to funding levels, as both minimum and maximum funding requirements are heavily regulated to ensure solvency and compliance with federal laws. In this article, we’ll explore the concepts of minimum and maximum funding levels, why they matter, and how they impact plan sponsors.

What is ERISA and how does it benefit your business?

The Employee Retirement Income Security Act (ERISA) is a significant federal law that sets standards for employee benefit plans offered by private employers. Enacted in 1974, ERISA aims to protect the rights and interests of employees who participate in retirement plans, health insurance programs, and other welfare benefit plans. ERISA was enacted to establish minimum standards for employee benefit plans to safeguard the financial security and welfare of employees. It applies to private-sector employers that offer employee benefit plans, including pension plans, 401(k) plans, health insurance plans, and other welfare benefit plans. ERISA does not cover government plans, church plans, or plans maintained outside the United States for non-resident aliens.

The Evolution of Defined Benefit Plans: Traditional to Cash Balance

The landscape of defined benefit plans has undergone significant transformation since American Express established the first private pension plan in 1875. Traditional defined benefit plans dominated the retirement landscape through the 1960s and 1970s, but their popularity began declining in the 1980s due to increasing administrative complexity and cost concerns.

Do You Need a Formal Valuation for Your BORSA/ROBS Plan? Here’s What Business Owners Should Know

If you’re using a Business Owners Retirement Savings Account (BORSA) or Rollover as Business Startup (ROBS) to fund your business dreams, you’ve probably wondered about valuation requirements. As a business owner, understanding when and how to value your BORSA/ROBS plan assets isn’t just about checking a box—it’s about protecting your investment and staying compliant with IRS regulations. Let’s break down everything you need to know about BORSA/ROBS plan valuations in plain English.

Harnessing the Advantages of the ROBS / BORSA Structure.

ROBS (Rollover as Business Start-up) or BORSA™ (Business Owners Retirement Savings Account) structures are exclusively compatible with C-Corps. This is because only C-Corps permit a 401(k) profit-sharing plan to serve as a shareholder. Upon discovering this exception, some prospective clients may feel disappointed, as the C-Corp often carries a stigma of “double taxation”. Historically viewed as “the entity choice of last resort” due to potential for double taxation resulting from corporate-level taxes and subsequent taxation upon distribution or liquidation.  The good news is that C corporations present unique tax advantages that S corporations and partnerships cannot replicate.