{"id":953,"date":"2012-04-17T22:41:02","date_gmt":"2012-04-18T02:41:02","guid":{"rendered":"http:\/\/therosenbaumlawfirm.com\/blog\/?p=953"},"modified":"2012-04-17T22:41:02","modified_gmt":"2012-04-18T02:41:02","slug":"plan-provisions-that-im-not-a-big-fan-of","status":"publish","type":"post","link":"https:\/\/therosenbaumlawfirm.com\/blog\/?p=953","title":{"rendered":"Plan Provisions that I’m Not a Big Fan of"},"content":{"rendered":"

I have written articles about retirement plan provisions that are good ideas and some that are bad.<\/p>\n

Here are some provisions that dumbfound me:<\/p>\n

    \n
  1. Off calendar year 401(k) plans: While I understand companies can have non-calendar fiscal years, I have never been a big fan of off calendar year 401(k) plans where the plan year will not end on December 31st<\/sup>. Why? 401(k) plans are funded mostly by participant salary deferrals and participants must have a December 31st<\/sup> fiscal year for their individual taxes, so the salary deferral limits for a participant (also known as Section 402(g) limit) is on a calendar year, which will never be calculated to determine whether a participant exceeds that limit since their compensation is calculated on the off calendar plan year. Makes sense? For 401(k) plans, it just doesn\u2019t.<\/li>\n
  2. 401(k) Plans that don\u2019t offer an in-service distribution at normal retirement age: I believe 401(k) plans should allow an in-service distribution at age 59 \u00bd and if not, at least offer it at normal retirement age. Heck, it\u2019s mostly salary deferrals and a participant should be able to tap that money when they hit 65.<\/li>\n
  3. Defined benefit plans where the only investment is life insurance: Defined benefit plans, solely developed to pay premiums on a life insurance policy within a plan never ends in a happy story in tough economic times, where the employer (usually with only owner-employees) can no longer afford the minimum contributions to the plan, which is the annual premium for life insurance. I have seen too many employers surrender policies at huge losses to them.<\/li>\n
  4. 401(k) plans with no Roth provisions: Aside from the tax aspect of it, there is no difference between pre-tax deferrals and a Roth deferrals, so aside from advising the payroll company, there is no reason why a 401(k) plan shouldn\u2019t offer their participants the right to make pre or post tax deferrals.<\/li>\n<\/ol>\n

    <\/span><\/p>","protected":false},"excerpt":{"rendered":"

    I have written articles about retirement plan provisions that are good ideas and some that are bad. Here are some provisions that dumbfound me: Off calendar year 401(k) plans: While I understand companies can have non-calendar fiscal years, I have … Continue reading →<\/span><\/a><\/p>\n

    <\/span><\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,1],"tags":[],"_links":{"self":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/953"}],"collection":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=953"}],"version-history":[{"count":1,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/953\/revisions"}],"predecessor-version":[{"id":954,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/953\/revisions\/954"}],"wp:attachment":[{"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/therosenbaumlawfirm.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}