Let us create a 3D eBook for you!
Let us create a 3d Digital eBook for you! DigyCat.com

Making Every Penny Count


More and more workers are leaving their jobs and taking their 401 k retirement plan funds with them. While some are rolling their funds over into IRAs or other qualified plans; many are taking their distributions in cash. Once an employee has left the job, any payments of earned vacation, sick or other leave made after leaving the job were not considered for inclusion in deferrals to Solo 401k, 401(k), or 403(b) plans. These plans' definition of compensation excluded any post employment earnings as the IRS excluded it from the definition. As far as these plans' were concerned, it's as if the money was never earned.

Since the post employment earnings were not included in 401 k or 403 b compensation, these earnings were not a factor in any non discrimination or top heavy testing, as well as not being available for profit sharing or matching contributions.

Depending upon the employers' policy on vacation, sick or other leave accumulation, this exclusion could be a substantial amount. As an example, suppose you are earning $50,000 when you leave your company. You've been working hard, haven't needed a sick day in 3 years and haven't taken a vacation in two years. You have accumulated four weeks of vacation and twelve sick days. The vacation and sick leave represent $6400 in additional income. Had you had been contributing 10% to your plan; $640 extra would have been deposited into your account. That $640 at 7% for 20 years is $2,476.60 for a 400% return. But that 400% return has been left on the table up until now.

On May 25, 2005 and retroactive back to January 1, 2005 the IRS has redefined section 415 Compensation to include post severance compensation if it's paid within 2-1/2 months after separation from service. But this is only for payments that would have been paid if the participant had continued in employment or if they are for bona fide sick, vacation and other leave. The leave-related payments can be included only if the employee could have used the leave had employment continued. This new definition will still exclude severance payments due to severance of employment

Employers can now amend their 401 k or 403 b plans to accommodate the new definition but may find themselves making additional contributions for compensation paid in the next year. Employees can add more contributions to their accounts. Plan administrators may find that the new definition of Section 415 compensation presents some administrative challenges in tracking the information, separating it from non eligible compensation and performing timely non discrimination testing.

Lawrence Groves is the Director of the small business retirement administration services for the Retirement Group with the Solo 401k administration program at http://www.solo-k.com and the special 401(k) "Free for Three" ? administration program.

Lawrence comes to his clients with over 25 years as an experienced expert in plan design, administration, and compliance. Lawrence works closely with for profit, non-profit, and government agencies on 401(k), 403(b), 457, Profit Sharing, and Puerto Rican 165(e) small business plans.

Lawrence can be reached at Lawrence@solo-k.com or 727.844.7000


MORE RESOURCES:

Investing - Google News

This RSS feed URL is deprecated

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

Carrefour Steps up E-Commerce Push, Chases Deal in China - U.S. News & World Report


U.S. News & World Report

Carrefour Steps up E-Commerce Push, Chases Deal in China
U.S. News & World Report
People are silhouetted as they attend a news conference to present the strategic plan of French retailer Carrefour in La Defense, near Paris, France, January 23, 2018. REUTERS/Philippe Wojazer Reuters. By Dominique Vidalon. PARIS (Reuters) - Carrefour ...
Carrefour Plans to Cut 2400 Jobs, Invest $3.4 Billion Bloomberg

all 27 news articles »

US Product Lets Investors Triple Bet on Popular Tech Stocks - U.S. News & World Report


U.S. News & World Report

US Product Lets Investors Triple Bet on Popular Tech Stocks
U.S. News & World Report
Commuters pass by the NASDAQ Marketsite in New York, May 21, 2012. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS) Reuters. By Trevor Hunnicutt. (Reuters) - Investors are getting a high-octane way to bet on or against the stock market's ...

and more »

Cramer's guide to investing in the stock market's winning sectors - CNBC


CNBC

Cramer's guide to investing in the stock market's winning sectors
CNBC
As a result, investors flocked to steady growth stocks like Visa and Mastercard, shying away from traditional bank equities altogether. Other than Visa, Mastercard, Discover, PayPal and ancillary plays like Moody's and Morningstar, "it was simply too ...

and more »

The Dinner That Changed the Investing World - Wall Street Journal


Wall Street Journal

The Dinner That Changed the Investing World
Wall Street Journal
As the first U.S. exchange-traded fund was being launched 25 years ago, the fund's backers gathered for a casual dinner on the 10th floor of the American Stock Exchange's art deco downtown headquarters. Ivers Riley, an exchange executive, made opening ...

Ripple Drops As Nervous Investors Flee Cryptocurrencies - Forbes - Forbes


Forbes

Ripple Drops As Nervous Investors Flee Cryptocurrencies - Forbes
Forbes
Charles Bovaird , Contributor I am a financial writer and consultant who focuses on investments. Opinions expressed by Forbes Contributors are their own. XRP fell today, losing more than other top cryptocurrencies. Shutterstock. Ripple's XRP token ...

and more »

General Electric: Lessons In KISS Investing - Seeking Alpha


Weekly Register

General Electric: Lessons In KISS Investing
Seeking Alpha
While I think retail investors often get themselves into silly situations, Keep It Simple Stupid (“KISS”) is always one of the best approaches smaller investors can take. While investors need to be educated on the companies they own or would like to ...
Financial Newsletter - Zacks Investment Research Zacks Investment Research
General Electric Company - GE - Stock Price Today - Zacks Zacks Investment Research

all 208 news articles »

One-Third of Americans Spend More on Coffee Than on Investing ... - Motley Fool


One-Third of Americans Spend More on Coffee Than on Investing ...
Motley Fool
There are plenty of reasons Americans aren't investing as much as they should. For many workers, it's a matter of not having the money available after paying living expenses. For others, it's a matter of absent knowledge and fear. But even when these ...

and more »

'Cash Flow Investing' - A Report Card - Seeking Alpha


'Cash Flow Investing' - A Report Card
Seeking Alpha
I have been a proponent of "Cash Flow Investing" for the last year and a half or so. I have never said that it is a substitute for appreciation plays but that it is an adjunct to them. For some people and institutions desiring a steady stream of income ...

Social, bitcoin and other hot topics at the Inside ETFs conference - CNBC


CNBC

Social, bitcoin and other hot topics at the Inside ETFs conference
CNBC
The biggest names in the ETF business gather to debate the future of investing and break down the skyrocketing growth of exchange-traded funds.

and more »

LargeFriends.com - the best dating site for plus-sized singles!
SuccessfulMatchCentral.com - the best dating site for plus-sized singles!

PreLaunchX

MyIdeal Domain Is For Sale - $8,000 For Enquiries eMail Us

© www.MyIdeal.biz - 2012

home | site map | links