Quick Compensation Primer – The Basics

July 2018 Update:

When you’re a fiduciary of a retirement plan, understanding the basics of plan administration is one of the most critical and essential functions of your duties to oversee the plan. Below you will find information on how your plan design defines three basic compensation types that you should be aware of.

Having confidence that your plan meets compliance standards gives you the opportunity to spend your time focusing on plan performance in high impact areas, such as providing an outperforming investment lineup, lowering plan fees, and improving your workforces’ retirement readiness.Continue reading

ERISA Update: How Does Your Plan Define Compensation?

The term “compensation” plays a very important role in the operation of retirement plans.  Key areas where compensation is used within plan documents include: top-heavy minimum contributions; the limitations under Code Section 415; determining highly compensated employees (HCEs); nondiscrimination testing; allocations of plan contributions; and calculating the appropriate amount of employee deferrals.  For instance, the precise definition used could be the difference between participants getting hundreds of dollars more in employer contributions or deferral amounts.

To comply with IRS rules, qualified retirement plans must clearly describe in their document which definition of compensation they use.  Improper administration of a plan’s compensation definition may result inContinue reading