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Retirement Plan Annual Limits

2020

  • Compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), 408(k)(6)(D)(ii): 285,000
  • Elective deferral limit for 401(k), 403(b) and 457(b) plans: 19,500
  • Catch-up limit for 401(k), 403(b) and 457(b) plans: 6,500
  • Limitation for Defined Contribution Plans under section 415(c)(1)(A): 57,000
  • Elective deferral limit for SIMPLE 401(k) under Section 408(p)(2)(E): 13,500
  • Catch-up limit for SIMPLE 401(k) plans: 3,000

2019

  • Compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), 408(k)(6)(D)(ii): 280,000
  • Elective deferral limit for 401(k), 403(b) and 457(b) plans: 19,000
  • Catch-up limit for 401(k), 403(b) and 457(b) plans: 6,000
  • Limitation for Defined Contribution Plans under section 415(c)(1)(A): 56,000
  • Elective deferral limit for SIMPLE 401(k) under Section 408(p)(2)(E): 13,000
  • Catch-up limit for SIMPLE 401(k) plans: 3,000

2018

  • Compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), 408(k)(6)(D)(ii): 275,000
  • Elective deferral limit for 401(k), 403(b) and 457(b) plans: 18,500
  • Catch-up limit for 401(k), 403(b) and 457(b) plans: 6,000
  • Limitation for Defined Contribution Plans under section 415(c)(1)(A): 55,000
  • Elective deferral limit for SIMPLE 401(k) under Section 408(p)(2)(E): 12,500
  • Catch-up limit for SIMPLE 401(k) plans: 3,000

ERISA Fidelity bonds An ERISA fidelity bond protect the participants and beneficiaries in a retirement plan from fraud or dishonest acts on the part of the fiduciary and other selected employees. This type of bond can be purchased from most insurance companies. The amount of coverage should be no less than 10% of the plan assets with a minimum of a 1,000 bond up to a maximum required bond of 500,000.

To begin the process of purchasing a Fidelity Bond, click here (http://www.colonialsurety.com)

The Importance of Depositing Employee Deferrals Timely The Department of Labor guidelines suggest that plan sponsors need to deposit employee elective deferrals to the plan as soon as could be reasonably after being segregated from the employer’s general assets. For small employers (less than 100 participants), the DOL will not consider these deposits late if deposited by the 7th business day after following the day that amounts would have been payable to the participant in cash.

The timeframe for larger employers is less than seven business days. The DOL viewpoint is that the participant missed earnings from investments during the period when the elective deferrals were not deposited timely.

The Importance of Investment Diversification To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your plan assets among different types of investments can help you achieve a favorable rate of return while minimizing your overall risk of losing money. Market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk. In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under then Plan to help ensure that your retirement savings will meet your retirement goals. For more information on individual investing and diversification, visit the Department of Labor Web site: http://www.dol.gov/ebsa/investing.html.