In this episode of Inside the Plan with the 401(k) Brothers, Bill Bush and Andy Bush, advisors at Horizon Financial Group, talk with Melissa Terito, CPA, Partner and Third-Party Administrator at Sentinel Pension about some frequently asked questions that plan sponsors have been reaching out to her with.
Episode Highlights:
- 00:37 – Bill Bush and Andy Bush introduce Melissa Terito.
- 01:21 – How does COVID-19 sick pay play into what is counted as wages?
- 02:57 – When can a participant get back in after dropping below zero on
referrals?
- 04:31 – What can be done with plans that have safe harbor contributions?
- 06:42 – What if more than 20% of the employees are terminated, does that
mean that everyone becomes 100% vested in the plan?
- 07:36 – Can you pre-fund retirement contributions to an unallocate account?
- 08:52 – If a plan didn’t adopt the coronavirus-related distribution or the expanded loan provision, but a participant wanted to take a distribution, could they still do that and classify it as a coronavirus distribution?
- 11:22 – Where is the talk of a triple contribution limit increase coming from?
- 14:28 – Melissa has been impressed with her team at Sentinel.
3 Key Points:
- With the Family’s First Coronavirus Response Act, if an employee qualifies for sick pay, those wages are subject to 401(k).
- Once you suspend your safe harbor, you no longer have the top-heavy relief, which means you may have to make at least a 3% contribution.
- Communication with clients is highly important, especially during the uncertainty caused by the pandemic.
Tweetable Quotes:
- “The Family’s First Coronavirus Response Act basically expanded on sick pay that you have to pay employees in family medical leave.” – Melissa Terito
- “First, and foremost, if you have received a PPP loan and you are making your safe harbor match on a per-payroll basis, keep making the match, because those benefits are included in your PPP loan.” – Melissa Terito
- “A partial plan termination is going to be based upon the entire plan year.” – Melissa Terito
Resources Mentioned:
