Keeping 414(h) Pick-Up Plans Compliant
Section 414(h) of the Internal Revenue Code enables governmental employers to “pick up” certain employee contributions to retirement plans and thereby make them pre-tax contributions (and, in some cases, a payment by the employer). Despite considerable IRS guidance on pick-up contributions, employers often fall into noncompliance.
We have advised numerous public agencies on avoiding the problem areas of these complex rules.
We can help you stay compliant by determining:
- Whether “pre-tax” employee contributions were properly picked up.
- Whether plan designs that use or rely on pick-ups comply with current IRS guidance.
- Whether certain provisions involving pick-ups may create tax problems.
- If special timing rules apply to employee contributions that will be picked up.