Mega Backdoor Roth

Roth assets are becoming more and more essential to a successful retirement savings strategy. Concerns about rising tax rates and legislative changes (ex. SECURE Act eliminating the stretch IRA) are two important drivers. Let’s start with the basics of “Why Roth?”  Contributions are after-tax Tax free growth of principal and earnings Tax free withdrawals*  *after satisfying … Read more

DB/CB Provisions of ARPA

The American Rescue Plan Act of 2021 (‘ARPA’) contains a couple of provisions to help cash-strapped sponsors of defined benefit/cash balance (‘DB/CB’) plans. This relief probably won’t help a large number of your clients. However, if you have a client who is having difficulty making their required 2020 DB/CB contribution or missed a required contribution … Read more

Controlled Groups Rules for Qualified Retirement Plans

Introduction One of the most common issues that arise when CPAs are counseling clients regarding retirement plans is how the controlled group rules apply in qualified plan world. The controlled group rules ensure that a qualified retirement plan (or plans) maintained by an employer (or group of related employers) does not discriminate in favor of highly … Read more

Automatic Enrollment Tax Credit

What is the auto-enrollment tax credit? $500 per year, for a maximum of $1,500 over 3 years This auto-enrollment tax credit is in addition to any startup plan tax credits, as well as any available deductions for employer contributions The employer does not need to have to expenses associated with adding the auto-enrollment feature to … Read more

Taxation of CARES Act Distributions

If an individual received a 2020 1099-R, how does the CPA or individual know if the distribution reported on the 1099-R qualifies for special tax treatment under the CARES Act. The burden is on the taxpayer and his CPA to make the determination and to document their compliance with the CARES Act requirements. 1099-R Reporting There … Read more

New Planning Opportunities for 2020 Thanks to The SECURE Act

For self-employed individuals and business owners Effective for the 2020 tax year, The SECURE Act ended the deadline to adopt profit sharing plans, defined benefit plans and cash balance plans to the business’ tax filing deadline including extensions. This is huge! Typically, business owners don’t realize they need an additional tax deduction until completing their … Read more

Start-up plan tax credit

What did the SECURE Act change about the start-up tax credit? Since 2002 a federal income tax credit has been available for starting a retirement plan. All the SECURE Act changed was the amount of the start-up credit for tax years after 2019.  So everything else stays the same. Discussed separately, the SECURE Act also … Read more

Comments on SECURE Act Guidance in IRS Notice 2020-68

Nova 401(k) Associates and our affiliate, Administrative Fiduciary Services Inc. (collectively “NOVA”), are writing to provide comments with respect to IRS Notice 2020-68 (the “Notice”). Nova is a third-party administrator serving over 6,500 employers. Our current practice also includes multiple employer plans (‘MEPs’). Nova’s primary focus is on employers with fewer than 2,000 employees. Our affiliate, Administrative Fiduciary Services Inc. (‘AFS’) serves as an independent administrative fiduciary and provides administrative fiduciary services and support.

Comments on Pooled Plan Provider Registration Proposed Regulations

Nova 401(k) Associates and our affiliate, Administrative Fiduciary Services Inc. (collectively “NOVA”), are writing to provide comments with respect to the Notice of Proposed Rulemaking (“Proposal”) to provide a registration process for pooled plan providers (“PPP”) who wish to sponsor a pooled employer plan (“PEP”). Nova expects to register as a PPP and is supportive of the Department of Labor’s (the “Department”) regulatory initiative.

Auto-enrollment tax credit

What is the SECURE Act auto-enrollment tax credit? A $500 tax credit has been created for small employers who add an EACA to their retirement plan. The credit is available for 3 taxable years. What are the requirements to be an EACA? EACA stands for “Eligible Automatic Contribution Arrangement”.  The requirements to be an EACA … Read more