Is your medical practice’s retirement plan ready for 2018?
As we begin the fourth quarter of 2017, now is a perfect time to do some housecleaning for your medical practice’s retirement plan – both for the end of this year and to set up the beginning of the 2018 plan year. Here are a few things to consider.
What is the timing of your medical practice’s matching contribution?
While usually a matching contribution is funded on a per payroll basis, it may also be declared and funded once a year. Assuming your plan falls into this category, now is an ideal time to review the practice’s balance sheet in preparation to fund this obligation. Most recordkeepers can assist you in projecting what this amount will be.
Do you anticipate making a profit sharing contribution?
While considered a discretionary contribution by ERISA, for many practices, a profit sharing contribution is essential to the firm’s partners and utilized as a recruiting tool for talent. A profit sharing contribution typically occurs in the first quarter of the year but is for the previous tax year. As such, now is an excellent time to review projected financials with your key stakeholders or a CPA to begin planning for this contribution.
More commonly known as the deferral limit, 402g limit is the amount a participant may defer, or contribute from his or her earned income. For 2017, the limit is $18,000.
Do you have any plan participants that are eligible for a catch-up contribution?
IRS rules state that any participant that is age 50 or older during the plan year may defer an additional $6,000 above and beyond the 402(g) limit of $18,000. Note that this limit is available to ANY participant that turns age 50 by the end of the year.
All of the above forms of contributions may be applied to the 415 limit of $54,000 for 2017. This is the maximum amount that any participant may receive in their account, assuming they have qualifying compensation. The compensation limit, which drives the 415 limit, is $270,000 for 2017.
Annual Plan Notices
Depending on the specific design of your plan, you likely have participant notices that must be distributed to plan participants. These include, but are not limited to, a safe harbor notice, a QDIA notice, automatic enrollment notices and perhaps fund change notices. There are penalties imposed by IRS and DOL regulations if these are not distributed at least 30 days prior to the start of the 2018 plan year. Be sure to check with your recordkeeper or TPA to ensure these are handled properly.
Participant Education Planning
Are your participants aware of the benefits in the plan? Year-end offers an opportunity to discuss the benefits of the plan and encourage your staff to participate. These meetings also present an opportunity to highlight any pending changes to the retirement plan such as matching changes, profit sharing contributions, investment changes and other significant benefits. Touch base with your plan’s advisor or recordkeeper to discuss the best way to deliver this message to your staff.
Taking a bit of time to cover review these items for your retirement plan will ensure it continues to run smoothly and allow your practice to focus on patient care.