Compliance Stuff

Contributions Employers can contribute to their employees’ 401(k) accounts in two main ways:  matching contributions  and nonelective contributions. Matching contributions are tied to employee deferrals—employers contribute only when employees do. In contrast, nonelective contributions are made to eligible employees regardless of whether they contribute to the plan themselves. Understanding nonelective contributions is critical for both employers and employees. For employers, they offer flexible tools to meet plan goals—whether avoiding annual testing, maximizing owner contributions, rewarding employees, or fixing compliance issues. For employees, they can mean guaranteed retirement savings even without personal deferrals. This guide breaks down the three major types of nonelective contributions—safe harbor, profit sharing, and corrective (QNECs)—and when each may be appropriate. What Are 401(k) Nonelective Contributions? Nonelective contributions are employer contributions ma...

  The Internal Revenue Service (IRS) has taken the position that employers may incorporate health savings accounts (HSAs) and student loan payments among the allocation options for employer contributions offered outside of cafeteria plans. Quick Hits Employers may include HSAs and student loan payments among their employees’ allocation choices for employer contributions to benefit plan s. Some employers provide flexibility with regard to the allocation of their employer contributions among benefit plans as a way to enhance recruiting and retention. New contribution limits will kick in for HSAs and health reimbursement arrangements (HRAs) for 2025. Many employers and HR professionals have finished the open enrollment period for the 2025 plan year and are beginning t o make the next strategic decisions about their benefit plans for the future. A recent clarification in IRS policy permits employers to offer a broader range of options for allocations of employer contributions among ben...