You’re supported by our team of 13 dedicated associates that average over 30+ years of experience in the industry and almost 25 years of service with our firm.
Clients are our number one priority.
You’ll receive excellent service when dealing with any of our team members and can be confident that you’re receiving the best, targeted advice when we’re crafting for your company’s retirement plan.
As the founder of Compensation Planning, Jeff is a tax attorney with over 40 years of experience with Qualified Plans. His university experience in the taxation field spans both sides of the desk:
In addition to having taught the Retirement Planning course for the Certified Financial Planner™ designation (managed by Bryant’s Executive Development Center), Jeff has provided continuing education for industry groups including:
Out of over 1,000 nationally, Jeff is the first IRS-Credentialed ERPA (Enrolled Retirement Plan Agent) in Rhode Island. He speaks passable French, but believes tennis is the language of love.
Formerly the President of the Financial Planning Association of Rhode Island, Grant joined Compensation Planning in 2012 after spending the previous 6 years in Washington, D.C and California working at various retirement plan administrators, actuarial firms, and IBM where he offered consulting to the IRS.
Grant is a graduate of the Goldman Sachs’ 10,000 Small Businesses program, and holds numerous credentials and awards from the ASPPA (American Society of Pension Planners and Actuaries) including:
Grant’s other certifications, designations, and education include:
Grant has given continuing education presentations on retirement plans to accounting firms, financial advisers, and professional conferences. He has also as appeared as a guest expert on radio and TV shows including Making Money Last (WCRN) and The Money Pros (WPRI).
Grant enjoys activities such as biking, squash, and most demandingly, playing games with his daughter and dog (who doubles as the office mascot).
|401(k)s and DB Plans||IRC §||2021||2020||2019|
Defined Contribution Plan
|Maximum Annual Benefit |
Defined Benefit Plan
|Catch-Up Deferral – age 50+||414(v)||$6,500||$6,500||$6,000|
|Highly Compensated Employee||414(q)||$130,000||$130,000||$125,000|
|Key Employee (officer)||416(i)||$185,000||$185,000||$180,000|
|Social Security Taxable Wage Base||401(l)||$142,800||$137,700||$132,900|
|SEPs, SIMPLEs, & IRAs||IRC §||2021||2020||2019|
|SEP Annual Addition Limit||415(c)||$58,000||$57,000||$56,000|
|SIMPLE Salary Deferral||408(p)||$13,500||$13,500||$13,000|
|SIMPLE Catch-Up Deferral – age 50+||414(v)||$3,000||$3,000||$3,000|
|IRA Catch-Up – age 50+||219(b)||$1,000||$1,000||$1,000|
|Income Limit for Saver’s Tax Credit |
(based on filing status)
|Single, Head of Household||$49,500||$48,750||$48,000|
|Income Limit for Traditional IRA |
(based on filing status)
|Single/Head of Household||$76,000||$75,000||$74,000|
|Income Limit for Roth IRA|
(based on filing status)
|Single/Head of Household||$140,000||$139,000||$137,000|
|Married Filing Jointly||$208,000||$206,000||$203,000|
|Married Filing Separately||$10,000||$10,000||$10,000|
Section 412 of ERISA requires that all fiduciaries and any other persons who handle or are responsible for the assets of a qualified plan must be bonded with an ERISA Fidelity Bond. The bond is to reimburse the plan if any plan assets are lost through the fraud or dishonesty of persons handling plan funds. Fraud or dishonesty includes such acts as theft, forgery, embezzlement, misappropriation, or willful misapplication of plan assets.
Every individual must be bonded for at least 10% of the amount of plan funds they handle up to a maximum of $500,000, but in no case for less than $1,000. The amount of funds considered to be handled by each person shall be the total funds subject to risk of loss through acts of fraud and dishonesty and such person during the preceding year.
You can obtain the necessary coverage by calling your casualty insurance agent and asking if your current policy includes coverage. If not, you should request a rider to policy or purchase a separate ERISA Fidelity Bond for your plan. Be sure that your agent understands that a fidelity bond is not the same as fiduciary liability insurance. Tell your agent the persons to be bonded and for what amounts. This includes all fiduciaries (trustees) and anyone who handles plan monies (e.g. payroll clerk). A bond in the name of the plan alone will suffice.
If you need a referral to an agent for a Travelers or Hartford insurance bond, please contact us.
You may wish to purchase a 3-year bond online through Colonial Surety. NOTE: only Fidelity coverage is needed and NOT Fiduciary.
Failure to secure a bond will require your plan to obtain a certified audit from an accountant, which must be attached to the 5500. This audit can prove quite costly. Not only is the bond required but not getting one is expensive as an audit often costs $8,000.
Once you have obtained a bond for your plan, be sure to forward a copy of the informational page to us. Please be sure the page contains the following information:
NOTE: Purchasing a 3-year bond can be much less expensive than a 1-year bond. Some insurance companies may quote you an outrageous price for your bond (example: $5 for each $1,000 of coverage). Here are approximate premiums we have seen charged for a 3-year bond:
$10,000 bond – $150*
$50,000 bond – $200*
$100,000 bond – $300*
*Approximate premiums. Actual premium could be higher or lower
A highly compensated employee includes more than 5% owners and family members (see “Who is a key employee?” below). An individual is highly compensated for 2020 if they earned more than $125,000 from the employer in 2019. For 2021, anyone who earns more than $130,000 in 2020 will be highly compensated. The test is a retrospective one. Check out the Annual Plan Limits section of this website for specific dollar amounts that apply to other years.
Highly compensated employees might be limited as to what they can defer in 401(k) plans. Also, qualified retirement plans cannot illegally discriminate in favor of highly compensated employees for contributions, and certain coverage testing must be satisfied.
We test each plan every year to insure that discrimination testing and coverage testing are satisfied.
A key employee is someone who owns more than 5% of the employer or a member of his family (spouse, child, parent, grandparent). It will also include any officer who makes more than $180,000 in 2020 or someone who owns more than 1% of the employer and makes more than $150,000. The category of key employee is important only for top heavy testing and for discrimination testing for cafeteria plans.
A fidelity bond is an insurance policy that protects the plan from fraud or dishonesty by fiduciaries. All fiduciaries and anyone who has control of or handles plan assets must be bonded.
The minimum bond is $1,000, or 10% of the plan assets, if larger. The maximum required bond is $500,000. The IRS and Department of Labor are getting very particular about bonding, and we advise all clients to secure this protection. As an additional matter, an accountant’s audit of the plan will be required if adequate bonding is not in place. Any non-qualifying assets, which includes real estate, art work, collectibles, etc., must be bonded for 100% of value.
Most insurance companies charge a minimum premium of $75 to $100. New plans should purchase the largest bond they can for the minimum charge. Sometimes savings can be realized if a 3 year bond is purchased.
If you have trouble securing a bond, we will be glad to recommend people who can give you proper guidance in this area.
A top heavy plan is one in which key employees have more than 60% of the account balances or accrued benefits held under the plan. A test is performed as of the last day of the plan year and will determine the top-heavy status for the subsequent year.
Top heavy plans must adhere to a specific vesting schedule and provide for minimum contributions. The minimum contribution is the lesser of 3% or the highest percent of pay added to the account of any key employee.
Note that salary deferrals under a 401(k) will count as account additions, so top heavy 401(k) plans may have required contributions if owners defer.
A prohibited transaction is some direct or indirect activity by a party in interest or a disqualified person that involves plan assets. Disqualified persons and parties in interest include fiduciaries, plan sponsors, certain owners of the plan sponsor and their family members.
Prohibited transactions include any sale, exchange, or lease of property, use of plan assets, or extension of credit. The intent or financial merit of a transaction is not an issue. The very fact that the prohibited transaction is entered into will trigger an excise tax. If any potential out of the ordinary transaction is even contemplated, it is best to contact us immediately so that we can discuss its propriety.
A fiduciary must bear in mind that plan assets are not corporate assets, and the two must be kept separate and distinct. Prohibited transactions will generate a 15% excise tax, with the possibility of a 100% tax if the transaction is not corrected or reversed to make the plan whole, and deny any benefit to the party in interest.
Your contribution is due by the time the plan sponsor tax return is due, including extensions, in order for the contribution to be deductible for the current year. Companies that sponsor a pension plan, like a defined benefit or cash balance plan, as opposed to a profit sharing or 401(k) plan, must make their contributions by 8½ months after the end of the plan year to satisfy minimum funding standards.
The Department of Labor (DOL) says that deposits must be separated from the employer assets as soon as administratively feasible. The DOL has now interpreted this to mean that monies should be remitted no later than 7 business days from the end of the payroll period for which monies are deferred.
This is a change from the prior standard. DOL is getting very strict about this. Late deposits are subject to IRS penalties and the employer should make up the earnings that those funds would have earned if they had been invested timely.
You can defer $19,500 out of your wages in 2020. This is known as the 402(g) limit. If you are 50 or older in 2020, you can defer an extra $6,500 as a catch up.
There is also a limit on how much you can have added to your account overall, from all sources. For 2020, the annual addition limit is $57,000. This number will include salary deferrals, the employer profit sharing and employer match as well as any reallocated plan forfeitures. It will not include the amount of any catch up contribution. Check out our Annual Plan Limits page for more details.
If you are a highly compensated employee, you might be limited as to what you can defer by what the non-highly compensated group defers.
It depends on the distribution policy expressed in the plan document. Many plans state that participants will not receive a distribution until administratively feasible after the end of the year in which they terminate. This will allow us sufficient time to review all plan data and ensure that a participant receives exactly what he is entitled to.
If your plan fails 401(k) testing, meaning that a Highly Compensated Employee (HCE) deferred too much according to testing rules, there must then be a corrective distribution of the excess deferral in order for the plan to remain qualified. Under current rules for 2020, corrections made in 2021 are taxable in the year of distribution. Distribution made later than 2½ months after the end of the Plan Year, will also be subject to a 10% excise tax.
If a participant has deferred more than the dollar limit under 402(g) then the excess contribution must also be distributed. The threshold was $19,500 for 2020, with an additional catch up contribution of $6,500 for participants who attained age 50 during calendar 2020. This distribution is also taxable in the year of receipt. This correction must be made by April 15 following the year of contribution. Failure to do so could impact the qualified status of the Plan.
Note that in no event is any adjustment supposed to be made to the W-2 of the participant. The distribution is taxed in the year of receipt with a 1099-R issued after the end of the Plan Year.
If there is a problem with passing salary deferral (401(k)) and match (401(m)) testing and refunds are to be made, corrective distributions must be made within 2½ months after the end of the plan year to avoid paying a 10% excise tax.
There are several reasons we ask about ownership in other companies. We need to determine if there is a controlled group or affiliated service organization, which might require us to aggregate your company with the other related company for purposes of several tests.
It is advisable to give us all the information and let us determine if there is an issue you must be concerned with. If your company is to be sold or acquired, or you in turn plan to acquire another company, it is best we be informed as soon as possible so that we can assist you with any retirement planning issues.
There are certain decisions that might be made with respect to any of these transactions, but some of your options may be lost due to a failure to act promptly.
In addition to the position(s) below, we are always open to hearing from talented, dedicated, and experienced administrators that would like to join our team.
If you are looking to join a firm that is focused on employee development, customer service, retirement plan design, and being the local experts, then please reach out below to open a dialogue. Our staff average almost 25 years of service as part of our team.
As we continue to grow, we will be looking to add to our experienced team. Ideal candidates will have mastered the basics and want to be challenged with cross tested plans, defined benefit plans, and consulting with clients. If you like problem solving, are self-motivated, and can work in a fast-paced environment, we would look forward to seeing how you might best fit in with our organization to continue to expand your skills and knowledge.