SECURE 2.0 Act: Required Minimum Distributions (RMD) and Age Limits Explained

Navigating the intricacies of retirement savings is vital for small business owners. The SECURE 2.0 Act has brought about pivotal changes in the realm of Required Minimum Distributions (RMDs) and Age Limits for retirement contributions. Understanding these modifications is crucial for optimizing retirement strategies in line with the latest legislation, offering greater flexibility and opportunities for both businesses and their employees.

Required Minimum Distributions & Age Limits Explained

The SECURE 2.0 Act has made noteworthy adjustments in the age criteria related to 401(k) plans. Specifically, the age at which individuals need to start taking Required Minimum Distributions (RMDs) from their accounts has shifted. Previously pegged at 70½, it’s now set at 72. Additionally, the act has eliminated the age limits for contributions, meaning individuals can now continue to contribute to their retirement savings without any age restrictions, provided they have an income.

Benefits for Small Businesses:

The alterations introduced by the SECURE 2.0 Act provide several advantages:

  1. Extended Savings Window: The opportunity to contribute for longer and the delayed start for RMDs grant employees more time for their investments to potentially grow. This change can boost participation rates substantially in company-offered 401(k) plans.
  1. Tailored Retirement Strategies: Without stringent age limits and with a revised RMD age, businesses and their workforce can customize retirement paths, accounting for personal life circumstances, health factors, and financial goals.
  1. Enhanced Employee Morale and Retention: By aligning retirement offerings with the SECURE 2.0 Act’s age-related modifications, businesses can appeal to and retain a seasoned, competent workforce.

In conclusion, the SECURE 2.0 Act’s updates surrounding Required Minimum Distributions and age limits offer a revamped retirement planning framework for small business owners. Embracing these changes can foster a flexible financial landscape, ensuring businesses and their employees have retirement plans that align with evolving individual needs.

For further insights on tailoring retirement plans in accordance with the latest legislative nuances, read more with the saveday blog.

ERISA Fidelity Bonds and the 401(k): Eligibility, Requirements, and You

If you’re an HR administrator, Benefits Coordinator, or small business owner, you might be a 401(k) plan sponsor. If so, you may have heard about the ERISA Fidelity bond. This article will help you understand what it is, who it covers, and why it’s crucial for Department of Labor compliance.

What is an ERISA Fidelity bond?

ERISA or the Employee Retirement Income Security Act, provides guidelines for private sector employee benefit plans. This includes 401(k)s and other defined contribution plans. ERISA also covers those who manage and invest plan assets.

In 1974, the U.S. Department of Labor introduced ERISA. Why? To address public worries about the mishandling of private pension funds and other employee benefit plans.

One requirement of ERISA stands out. Those who handle plan funds and other assets must have a fidelity bond. This bond helps protect the plan from fraud-induced losses.

Simply put, an ERISA Fidelity Bond is like insurance. It protects workers’ retirement savings from fraud or dishonest acts.

Who needs to be bonded?

According to Department of Labor (DOL) regulations, if you handle plan funds or assets, you must be bonded.

How much coverage is necessary?

You need Fidelity Bond coverage equal to at least 10% of plan assets. However, the bond amount can’t be less than $1,000. And the Department won’t require a bond of more than $500,000. Or $1,000,000 for plans with employer securities. These amounts apply to each plan listed on a bond.

How can I purchase a bond?

Bonds can be procured from a surety or reinsurer listed on the Bureau of the Fiscal Service’s Certified Companies roster.

Saveday has teamed up with Colonial Surety Company to help clients secure the correct bonding. If you need to purchase an ERISA Fidelity Bond for your plan, you can click here to conveniently buy a bond today.*

For further details on ERISA Fidelity Bonds, you can access the “Fiduciary Responsibilities” PDF via the Department of Labor here.

*saveday is an affiliate of Colonial and earns commission on referrals.

401(k) HR Administration Made Easy: Partnering with Saveday for Small Business Owners

Implementing a 401(k) plan as a small business owner can be quite the administrative headache. Many small business owners don’t have the time or HR manpower to take on this project and manage their business at the same time. You don’t have to face this burden alone. Partnering with saveday streamlines and simplifies your HR administrative responsibilities. 

1. Simplified Plan Administration:

Saveday’s user-friendly platform simplifies plan administration. From employee onboarding to managing contributions and generating reports, saveday offers intuitive tools that make the process seamless. With automated data collection and reporting features, you can save time and effort while ensuring accuracy.

2. Personalized Support

Saveday provides dedicated support to guide you through every step of the process. Whether you have questions about plan setup, compliance, or employee communication, saveday’s experts are there to assist you via phone, email, and live chat services. Enjoy peace of mind knowing that you have a trusted partner to rely on for your 401(k) needs.

3. Expertise and Compliance:

Saveday’s team of retirement plan experts are well-versed in 401(k) regulations and compliance requirements, and complimentary custodial and fiduciary services are always included in our $0 employer-cost plans. By partnering with saveday, you can ensure that your plan is administered accurately and in full compliance with government regulations. Saveday takes care of the intricate details, allowing you to focus on your core business activities.

4. Cost Savings:

Opting for saveday can save you money compared to the alternative of hiring additional staff or outsourcing your 401(k) administration. By leveraging saveday’s simple and streamlined platform, you can reduce overhead costs and allocate resources to other important areas of your business.

5. Employee Engagement and Education:

Saveday offers robust employee engagement tools and resources to empower your workforce. With features like intuitive investment options, educational materials, and retirement planning tools, saveday helps employees understand and make the most of their 401(k) benefits. Now that they’re engaged, employees are more likely to appreciate and utilize their retirement plans effectively.

In short, managing the HR administrative burden of your 401(k) plan doesn’t have to be overwhelming. By partnering with saveday, you gain access to expert guidance, streamlined plan administration, cost savings, and enhanced employee engagement. saveday’s friendly and knowledgeable team will guide you through the complexities, ensuring compliance and efficiency every step of the way. 

Simplify your HR administrative tasks and provide valuable retirement benefits to your employees with saveday as your trusted 401(k) partner. Better yet, experience peace of mind and focus on what matters most – growing your small business to new heights.

Setting Up a 401(k) as a Small Business: Key Requirements and Restrictions

As a small business owner, you may be considering the benefits of offering a 401(k) plan to your employees. You may live in a state that is mandating businesses to offer retirement plans and are investigating private plan options. Whatever your situation, saveday is here to help navigate the dos and don’ts of sponsoring a retirement plan.

 A 401(k) plan is a popular retirement savings method that provides tax advantages for both employers and employees. However, before diving into the world of retirement plans, it’s important to understand the key requirements and restrictions associated with setting up and managing such a plan.

Who can set up a 401(k) plan?

A 401(k) plan can be established by various types of small businesses, including sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and certain non-profit organizations. The eligibility to set up a 401(k) plan depends on the structure and nature of the business. To learn more you can read the IRS 401(k) page here, but we’ve listed the key considerations below…

Key Considerations:

  1. Eligibility: A 401(k) plan must be offered to all eligible employees, which includes part-time workers, as long as they meet specific criteria such as age and length of service. Ensuring compliance with eligibility requirements is essential to avoid discrimination issues. Saveday can help you navigate the eligibility criteria and ensure that your plan is inclusive and compliant.
  1. Contribution limits: The IRS sets annual limits on the amount employees can contribute to their 401(k) accounts. For 2023, the elective deferral limit is $20,500, with an additional catch-up contribution of $6,500 for individuals aged 50 or older. These limits are subject to adjustment by the IRS in subsequent years. Saveday’s platform enables easy tracking of employee contributions and ensures that they stay within the IRS limits.
  1. Employer Contributions: While not mandatory, employers have the option to make contributions to their employees’ 401(k) accounts. These contributions can take the form of matching contributions or profit-sharing contributions. However, there are rules and limits governing employer contributions, including non-discrimination requirements. Saveday can assist you in designing and implementing an employer contribution strategy that aligns with your business goals and maximizes employee benefits.
  1. Vesting: Vesting refers to the ownership of contributions made by the employer. The IRS has specific rules on vesting schedules, which determine when employees have full ownership of employer contributions. Understanding vesting schedules is crucial for both employers and employees. Saveday can help you establish vesting schedules that are fair and compliant with IRS regulations.
  1. Testing and Reporting: The IRS requires certain tests to ensure that the 401(k) plan does not disproportionately favor highly compensated employees. These tests include the Actual Deferral Percentage (ADP) test, Actual Contribution Percentage (ACP) test, and top-heavy testing. Additionally, annual reporting of the plan’s activity is required through Form 5500, which provides transparency and accountability. Saveday offers complimentary custodial services – which means we do all the reporting and filing for you, at no additional cost.
  1. Fiduciary Responsibilities: As a plan sponsor, you have fiduciary responsibilities to act in the best interests of the plan participants. This includes prudently selecting and monitoring investment options, providing plan information to participants, and ensuring compliance with Employee Retirement Income Security Act (ERISA) regulations. Saveday can act as your ERISA 3(16) and 3(38) fiduciary, relieving you of some of these responsibilities.

Starting a 401(k) at $0 Cost to Your Business

By partnering with saveday, you’ll not only set your small business on the path to a successful 401(k) plan, but you’ll also empower your employees to achieve a secure retirement. With our expertise and personalized guidance, saveday becomes your trusted ally in navigating the complexities of 401(k) plans. We’ll ensure that you meet all key requirements, comply with regulations, and provide your employees with valuable benefits.

Don’t wait any longer to take the first step towards offering a competitive retirement savings option for your employees. Contact saveday today and discover how our services can make a significant difference in your small business. Together, we’ll create a plan that meets your unique needs and helps your employees build a solid financial future. Your commitment to their well-being will set your business apart and contribute to their long-term success. Let saveday be your partner in making it happen.

Form 5500: Different Types and Eligibility Criteria

Form 5500 is a crucial reporting requirement for employee benefit plans, providing valuable insights into their financial health and operations. It’s important to understand the different types of Form 5500 and the specific eligibility criteria set by the IRS. In this post, we will explore the Long-Form, Short-Form (SF) and EZ versions of Form 5500, clarifying who is eligible for each one based on IRS criteria. This knowledge will help ensure compliance and simplify your reporting obligations. Questions about the Form 5500? Check out our Form 5500 FAQs here.

Types of Form 5500 and Eligibility Criteria:

  1. Long-Form (Form 5500):

The Long-Form version of Form 5500 is a comprehensive report designed for larger plans or those with complex features. It asks for detailed information about your plan’s operations, including financial statements and attachments. By providing a complete picture of your employee benefit plan, the Long-Form helps meet regulatory requirements, maintain transparency, and facilitate thorough reporting. It is required for plans with 100 or more participants at the beginning of the plan year. 

  1. Short-Form (SF) or Form 5500-SF:

The Short-Form, also known as Form 5500-SF, is a simplified reporting option for small plans. It reduces the reporting process by eliminating certain schedules and attachments required in the Long-Form. The short-Form focuses on essential plan information, ensuring compliance while easing the reporting burden. It is suitable for plans with fewer than 100 participants at the beginning of the plan year, offering a simpler approach to meet reporting obligations. 

  1. EZ or Form 5500-EZ:

Form 5500-EZ, also called the EZ version, is the simplest reporting option. It is specifically designed for one-participant plans or plans with no participants such as individual 401(k) plans or certain foreign plans. The EZ version requires minimal information, making it a straightforward choice for small plans with simple structures. It offers an easy and streamlined process for eligible plans to meet their reporting obligations. 

Navigating the nuances of Form 5500 and understanding the eligibility criteria for each version is crucial for accurate and compliant reporting. Saveday, as your trusted 401(k) provider, can give expert guidance and support throughout the process. Our experienced team will help determine the appropriate form based on your plan’s characteristics, ensuring compliance and simplifying your reporting obligations. 

Want to learn more about how saveday can simplify Form 5500? Discover your simplified options here!

Understanding Form 5500: Essential Reporting for Your Employee Benefit Plans

Navigating employee benefit plans and ensuring compliance can be overwhelming for small business owners. However, with the right resources and assistance, this process becomes more manageable. In this blog post, we’ll explore the significance of Form 5500, its requirements, and how saveday, as your leading 401(k) provider, can simplify your reporting obligations. Let’s dive in!

Wondering which Form 5500 your business should file? Check out our Form 5500 eligibility post here.

What is Form 5500?

Form 5500 is an annual report required by the IRS, Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC) for employee benefit plans. It provides crucial information about your plan’s activities, financial condition, and overall operations.

Why is Form 5500 important?

Filing Form 5500 goes beyond meeting legal obligations. It ensures transparency, compliance, and protects the interests of both employers and employees. By submitting this form, you demonstrate your commitment to accountability and provide valuable information to government agencies for research and compliance purposes.

What information does Form 5500 require?

Form 5500 requires comprehensive details about your employee benefit plan, including general plan information, service provider details, participant counts, financial data such as assets and liabilities, types of benefits offered, operational activities, and plan funding. It offers a holistic view of your plan’s health and performance.

To learn more about the different types of Form 5500, check out our detailed guide here!

Simplified Compliance Testing

Maintaining the integrity of your 401(k) plan involves conducting compliance testing, which is crucial. At saveday, we understand the complexities involved in this process and offer you support every step of the way. Here’s how saveday can assist your small business:

  1. Fairness and Equal Opportunity:

Saveday ensures that your 401(k) plan operates fairly and provides equal opportunities for all employees to save for retirement. Through comprehensive compliance testing, saveday helps prevent favoritism towards owners or highly compensated employees, fostering a level playing field for all participants.

  1. Expert Guidance:

Saveday’s team of retirement plan experts is well-versed in IRS regulations and compliance testing requirements. They provide personalized guidance, ensuring that your plan meets all necessary guidelines and restrictions.

  1. Plan Optimization:

Saveday helps optimize your plan to ensure compliance while maximizing benefits for your employees. They analyze your plan’s structure, contribution limits, and other factors to create a tailored solution that suits your business needs.

  1. Streamlined Administration:

Saveday’s intuitive platform simplifies plan administration, including Form 5500 reporting. With automated data collection and reporting features, you can streamline the filing process, saving time and effort.

Summary

Filing Form 5500 and conducting compliance testing are crucial responsibilities for small business owners with employee benefit plans. By partnering with saveday, you can simplify these obligations, comply with regulations, and protect the interests of your employees. Transparency, fairness, and adherence to IRS guidelines contribute to the long-term success of your business and the financial well-being of your employees. Stay informed, stay compliant, and continue providing valuable benefits through your employee benefit plans. We’re with you every step of the way!