Who is considered a highly compensated employee in 2021?
4 For the 2021 plan year, an employee who earns more than $130,000 in 2020 is an HCE. For the 2022 plan year, an employee who earns more than $130,000 in 2021 is an HCE.
What is the highly compensated exemption?
A highly compensated employee is deemed exempt under Section 13(a)(1) if: The employee earns total annual compensation of $107,432 or more, which includes at least $684* per week paid on a salary or fee basis; 2. The employee’s primary duty includes performing office or non-manual work; and 3.
What are the advantages of using a TPA?
Some TPAs administer fully-insured plans on behalf of insurance companies. The greatest “product” advantage TPAs have is flexibility and personalized service. Every TPA-administered plan is custom-designed for the plan sponsor’s needs and specific workforce.
What’s the difference between a TPA and consulting firm?
In both cases…like the relationship between TPAs and their clients…the service is on an ongoing, personalized closely-involved, long term basis. The difference between TPAs and consulting firms is that the TPA provides a variety of services to the whole plan + implements it + administers it on an on-going basis.
Who is the center of authority for a TPA?
In the case of TPAs, the center of authority for the client employee benefit plan is the Board of Trustees of the plan (or the plan sponsor directly, if there is no Board of Trustees). It is important to remember this relationship!!
What kind of relationship do TPAs have with their clients?
TPAs have a relationship with their clients much like that of their sister professions CPA and law firms. Too many people wrongly think of TPAs being like the insurance industry. Instead, the relationship resembles that between an employer or plan and their independent CPA firm or outside law firm on retainer.
What does a third party administrator do-TPA 401k?
The most important but often forgotten role of a TPA is plan design. We are experts in plan design and deliver retirement plans that maximize contributions to highly compensated employees (HCE) within the limits of the law. Much like an attorney providing solid legal advice to clients, we help you maximize your contributions.
Some TPAs administer fully-insured plans on behalf of insurance companies. The greatest “product” advantage TPAs have is flexibility and personalized service. Every TPA-administered plan is custom-designed for the plan sponsor’s needs and specific workforce.
In both cases…like the relationship between TPAs and their clients…the service is on an ongoing, personalized closely-involved, long term basis. The difference between TPAs and consulting firms is that the TPA provides a variety of services to the whole plan + implements it + administers it on an on-going basis.
How does a company compensate a highly compensated employee?
A company can correct any imbalance in its retirement plans by making additional contributions for the non-highly compensated group of employees. Alternatively, the firm could make distributions to the HCE group, which will have to make withdrawals from the plan and pay taxes on the withdrawals.