I have received multiple inquiries regarding the Consolidated Appropriations Act of 2021 Gag Clause Prohibition Compliance Attestation certification and the question about Form 5500.

This is about your medical plan, not your retirement plan.

Form 5500's are also required for benefit plans such as medical plans.

In general, most medical plans are considered ERISA plans which have a Form 5500 requirement, however if there are under 100 participants covered under the medical plan, then no Form 5500 is required to be filed, however your plan is still likely considered an ERISA plan.

If you are not sure what Plan No. to use, use 501 since the 500 series is used for health and welfare benefit plans.

The regular 401(k) limit will increase from $23,000 to $23,500 in 2025.

The regular catchup limit for participants who are age 50 or over in 2025 will stay the same at $7,500.

But there's something new!

If you are between ages 60 and 63 in 2025, your catch up limit is not $7,500 but $11,250!

I'm often asked about Cash Balance Plans. They are pension plans that allow for much larger contributions, in addition to the standard 401(k) and profit sharing contributions.

In general, they work well for small professional businesses, with business owners of any age, that know they will have significant and ongoing revenue and would like to limit their taxes on the business' income.

Here's a short article from the National Association of Plan Advisors I liked with some basics about whether it's a good fit:  When Might a Cash Balance Plan Be a Good fit?

On December 29, 2022, President Biden signed the SECURE 2.0 Act which has many changes and options for retirement plans. Among them is the following:

New plans for employers with under 50 employees who have not had an existing plan in the prior 3 taxable years, including SIMPLE or SEP, may get a 100% tax credit for eligible start up costs.

Such new plans may even get up to 100% of a tax credit for employer contributions (match or profit sharing) for the 1st two years, with partial credit for the next 3 years.

As always, there are many details about this, so please contact me for additional information and to make sure your potential new plan will qualify.

Wow, 7/1/22 and it's 5 years since formally going into business as Hawaii5500 LLC.

What an interesting and unbelievable five years it's been, personally, professionally and globally.

I'm happy to say that Hawaii5500 is thriving and continues to grow.

Mahalo to all who believe in us.

Just released – 2021 Retirement Plan Limits.  There were only a few limits that changed, of note:

• Maximum Compensation Limit increased from $285,000 to $290,000
• Maximum Dollar limit to Defined Contribution Plans increased from $57,000 to $58,000

 
Note that the following limits remain the same for 2021:

• 401(k) calendar year limit of $19,500
• 401(k) calendar year catchup limit of $6,500
  

Some thoughts to consider when choosing a service provider:

• Are the fees reasonable, and have they always been reasonable?  Do you receive surprise billing?
• Is having local contacts important to you?  Do you have to fit your phone calls into your service provider's time zone?
• Who will be performing the work on your account and who will be your direct contacts?  Is your data being outsourced to multiple locations without your knowledge?  Do you have to call multiple numbers? 
• Does your service provider engage in multiple lines of business, thereby stretching their focus thin, or do they focus exactly on the service that you are looking to engage them with?
• Do they charge you a fee (up to $1,000) simply for terminating their service agreement when no work is required of them?
• Do they stand on their own merits or do they attack their competitors in order to gain client loyalty?

Any questions you might have, please do not hesitate to contact me at 808-5500-080 or Lila at 808-754-2747 or contact me below.

A bill has been introduced to increase the automatic cashout limit for terminated participants from $5,000 to $8,000.  Hawaii5500 will keep you updated.

Stay tuned for updates regarding the recently passed SECURE Act as well as Hardship Withdrawal Amendment requirements.