401(k) Tax Requirements for Qualified Plans

A qualified plan is one that meets the IRS's tax requirements to qualify for favorable tax treatment.  According to an article posted on the Employee Benefits News website, there are 6 "big" 401(k) tax requirements that "can impact your plan design and ultimately your plan's success."

 

The big 6 tax requirements posted in "Don't mess with the IRS: Tax requirements affect 401(k) plan design" are:

 

1. Election to receive contribution

2. Maximum one-year eligibility

3. Annual 401(k) limits

4. ADP and ACP tests (Actual Deferral Percentage and Actual Contribution Percentage tests)

5. Vesting requirements

6. No distributions while a participant

 

Please contact us with questions about how the tax requirements for 401(k) can impact a specific plan.