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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    ERISA

Date & Time
  • event Date

    Thursday, June 6, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will provide employee benefits attorneys, plan sponsors, and administrators with detailed guidance on performing nondiscrimination testing and compliance for 401(k) plans. The panel will review the minimum coverage, evaluate ADP and ACP tests for ensuring compliance with IRS nondiscrimination requirements, explain the benefits and costs of adopting a safe harbor plan design, assess the impact of SECURE 2.0, and outline the complex legal issues involved in multi-employer plans.

Faculty

Lori L. Shannon
Miscellaneous

Ms. Shannon counsels private and public companies and tax-exempt entities on the design and implementation of employee benefit and executive compensation plans and arrangements. She advises clients in regard to tax-qualified retirement plans, 403(b) plans, health and welfare benefit plans, nonqualified deferred compensation plans and equity-based incentive plans. Ms. Shannon assists clients, many in the professional services arena, with the design and drafting of executive and physician employment agreements, as well as severance, retention and change in control agreements.

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Nicole D. Bogard
Partner
Barnes & Thornburg

Ms. Bogard practices in the firm's Employee Benefits & Executive Compensation Department where she collaborates with executives, in-house counsel and human resource professionals at publicly traded and private companies to design compliant total rewards programs that facilitate business objectives. She has considerable experience with counseling clients on the Affordable Care Act, HIPAA privacy and security rules, wellness programs, self-funded health plans, COBRA administration, and nondiscrimination rules. Ms. Bogard also represents clients with matters before the IRS and the DOL.

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Description

The IRS prohibits 401(k) plans from discriminating in favor of highly compensated employees and requires plan sponsors to conduct yearly nondiscrimination testing to ensure that contributions made by non-highly compensated employees or NHCEs are proportional to contributions made by the company's owners and executives (highly compensated employees or HCEs).

Plans that fail nondiscrimination testing may be required to make corrective, taxable distributions to HCEs. In addition, there are certain aspects that must be considered under recently enacted SECURE 2.0 as such relates to contributions, distributions, and long-term part-time employees. Each year, a large number of company plans fail the nondiscrimination tests, resulting in the return of contributions to HCEs. And according to the IRS, some company plans that fail nondiscrimination testing also fail to properly make their corrective distributions.

Companies can avoid 401(k) nondiscrimination testing with safe harbor plans, but they involve strict requirements for companies to make certain minimum contributions to employee accounts. Plan sponsors must carefully weigh the benefits and costs before electing a safe harbor plan design.

Listen as our panel of employee benefits attorneys offers detailed guidance on performing nondiscrimination testing on 401(k) plans. The panel will discuss the impact of SECURE 2.0, minimum coverage, ADP and ACP tests for ensuring compliance with IRS nondiscrimination requirements, the benefits and costs of adopting a safe harbor plan design, and the complex legal issues that multiemployer plans present.

Outline

  1. Nondiscrimination rules under Section 401
  2. Nondiscrimination testing
  3. Minimum coverage test
    1. Actual deferral percentage (ADP) test for HCEs
    2. Actual contribution percentage (ACP) test for HCEs
    3. Cross testing
    4. Benefits, rights, and features
  4. Impact of SECURE 2.0
  5. Safe harbor plan designs: risks and opportunities
  6. Multiemployer plan issues
  7. Corrective action for noncompliant plans

Benefits

The panel will review these and other key issues:

  • How can plan sponsors maximize benefits for HCEs without violating the nondiscrimination rules?
  • What advantages does a cross-tested safe harbor plan offer?
  • What special rules and considerations apply to multiemployer plans?
  • What is the impact of SECURE 2.0?