When is a refund not necessarily a good thing?

Couple using laptop to plan 401K

When it comes out of your 401(k) account

At this time of year required annual 401(k) testing takes place and sometimes results in portions of contributions from last year being returned to key employees, owners or officers of organizations. In most cases, these were contributions that were intended to be saved for retirement and not returned as taxable income.
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In most cases, these were contributions that were intended to be saved for retirement and not returned as taxable income.

Often, 401(k) refunds to key employees are considered just “the way it goes.” It may, however, not necessarily have to be that way. Three design options in your retirement program could solve this problem for your key employees and allow them to save more, or even up to the maximum IRS limits. You don’t need all three. The factors that determine which is the best option are: 
  • Time
  • Budget
  • Your corporate structure
If your 401(k) plan has an undesirable refund problem and you would like to find out which of the three options may be best to solve it, please let us know. Feel free to send our team an email and we can schedule a 15 minute phone call.

In NC, SC, GA or Virginia: Troy Jackson: [email protected]

In Florida: Tim Hollinger: [email protected]

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