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Associated Benefits and Risk Consulting - Retirement Plan Services


Understanding the basics of 401(k) nondiscrimination testing

A benefit plan must not discriminate in favor of highly compensated employees (HCEs) and key employees with respect to eligibility, contributions, or benefits. To ensure compliance, all 401(k) plan sponsors should understand the basics of nondiscrimination testing and, considering the complexity of the rules, make sure this critical duty is being done right. Even if a plan sponsor relies on a third-party administrator (TPA) to perform the nondiscrimination testing, the plan sponsor is responsible for the consequences of noncompliance, which could include tax consequences for plan member investments.

A hardship reminder and new contribution limits

Earlier this year, Congress passed (and the President signed) the Bipartisan Budget Act which included several provisions affecting qualified retirement plans. As employers look ahead at planning for a new calendar year, let’s take a moment to discuss the change to hardship distributions employers may consider adopting. New legislation did not change what might constitute an individual hardship, but it does make hardship withdrawals easier to obtain for participants.

Is robo-advisor just a novelty, or can it provide real value?

Perhaps the best analogy for a robo-advisor is the self-driving car: it’s cool and impressive — sometimes even useful — but in many situations the technology can be incompatible or downright dangerous. Robo-advisors can provide useful advice to the small-balance investor who wants to get pointed in the right direction, but if you are beyond this point, proceed with caution.