Are you an expert with 401(k) plans? Check out these True or False statements to test your knowledge.
A 401(k) plan is better than an SEP/Simple plan.
IT DEPENDS… A 401(k) Plan tends to be a better solution for businesses.
SEP & Simples are marketed as cheaper and easier because they are exempt from many reporting requirements. However, they lack the flexibility offered by a 401(k) Plan, which is particularly important to smaller or emerging and growing businesses. That being said, a plan’s ability to meet your needs varies on a company by company basis.
Employees are allowed to stop contributing and cash out their 401(k) account at any time while they are employed.
- The participant dies, become disable or otherwise has a severance from employment
- The plan terminates and no successor defined contribution plan is established or maintained by the employer
Any part-time employee who works less than 40 hours per week can be excluded from participating in the 401(k) Plan.
FALSE! The maximum number of hours an employee may be required to work to be eligible for the plan is 1000. Many “part-time” work schedules are longer than 1000 hours in a year.
All participants in a 401(k) plan could contribute up to $24,000.00 in 2016.
FALSE! The deferral limit for employees participating in a 401(k) in 2016 was $18,000.00. Employees who were age 50 or over at the end of the year may have been eligible to make an additional $6,000.00 in catch up contributions.
Leading Retirement Solutions can help me if I receive a letter from the IRS or Department of Labor.
TRUE! If you receive a letter from the IRS or Dept. of Labor, take a deep breath and call us. Our experienced team will manage the process of responding to them for you, from start to finish.
For more information about our services, visit our website.