Retirement Plan Newsletters
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Learn MoreOur experienced staff provides retirement plan services as needed
First American Bank offers a wide range of consulting services for company retirement plans. Whether we serve as your official third-party administrator or not, we can work with you to ensure your plan continues to meet its objectives and remains compliant. In addition to services listed below, our staff may also represent you before the Internal Revenue Service, the U.S. Department of Labor, and the Pension Benefit Guaranty Corp. on various plan matters. These services include but are not limited to:
- Audit assistance
- Analysis and redesign of existing plans
- Cost impact studies due to plan amendments, changes in law or regulations, hiring of new employees, acquisitions, etc.
- Fiduciary duties and responsibilities
- Cost analyses in regard to collective bargaining negotiations
- Optimal application of credit funding balances in pension plans
- Restriction upon pension plan benefits when required
- Plan terminations/Partial plan terminations
- Plan mergers and spinoffs
- Assistance with late Form 5500 filers through the Delinquent Filer Voluntary Compliance Program (DFVCP)
- Assistance with the IRS Employee Plans Compliance Resolution System (EPCRS) to remedy mistakes and avoid the consequences of disqualification through either the Self-Correction Program or the Voluntary Correction Program
- Compliance services for self-administered plans
First American Bank is a full-service bank with branches in Illinois, Wisconsin and Florida.
Disclosures
Not FDIC Insured | Not Bank Guaranteed | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank Deposit
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The IRS requires 20% withholding on all qualified plan distributions eligible for rollover to an IRA or another qualified plan. You will report the distribution as ordinary income on your personal tax return. Depending on your personal tax bracket, you may be required to pay additional taxes on the distribution or you may be entitled to a refund. If the additional amount of tax due is substantial, you may be required to make estimated tax payments. You may also be required to pay state income taxes. You should consult your personal tax advisor before making decisions regarding your distribution.
Prior to 2020, you were required to start taking Required Minimum Distributions (RMDs) by April 1 of the year following the year in which you attained age 70 ½. That rule still applies if you attained age 70½ by the end of 2019. Once you are required to begin taking RMDs, you must continue. For 2020, the SECURE Act increased the age to begin RMDs to age 72. The same April 1st deadline applies. Thereafter, you must take RMDs annually on or before December 31. Note, two required distributions will be issued your first year if you wait until the period January 1 to April 1 to begin your RMDs. You may avoid two taxable distributions in the first year by taking your first withdrawal on or before December 31 of the year in which you attain age 72.
However, if you are still working, you are not required to begin RMDs from your employer sponsored plan until April 1 of the year following the year in which you terminate employment. This exception does not apply if you own more than 5% of the employer, nor does it apply to IRAs.
Special Note: For 2020 the CARES Act temporarily suspended the RMD requirements from IRAs and qualified retirement plans provided the employer sponsoring the plan adopts the CARES Act provisions. Check with the sponsor of your retirement plan to confirm if you must take an RMD for 2020.
However, if you are still working, you are not required to begin RMDs from your employer sponsored plan until April 1 of the year following the year in which you terminate employment. This exception does not apply if you own more than 5% of the employer, nor does it apply to IRAs.
Special Note: For 2020 the CARES Act temporarily suspended the RMD requirements from IRAs and qualified retirement plans provided the employer sponsoring the plan adopts the CARES Act provisions. Check with the sponsor of your retirement plan to confirm if you must take an RMD for 2020.
The annual deferral may not exceed the lesser of:
a. $19,500 for 2021;
b. the maximum deferral amount allowed under the terms of the plan; or
c. the amount that allows the plan to meet the required nondiscrimination tests.
In addition, if you attain age 50 or older by December 31, you may defer an additional $6,500 catch up contribution.
a. $19,500 for 2021;
b. the maximum deferral amount allowed under the terms of the plan; or
c. the amount that allows the plan to meet the required nondiscrimination tests.
In addition, if you attain age 50 or older by December 31, you may defer an additional $6,500 catch up contribution.
If a plan accepts rollover distributions from other qualified plans, it may also allow for employees to make a rollover contribution before they meet the plan's minimum age and service eligibility requirements. These employees would be considered 'limited participants' in the plan.
Yes, the additional 10% tax applies, with limited exceptions. Exceptions include distributions that are made to a participant after termination of employment after attainment of age 55, distributions that are attributable to an employee being disabled, and distributions that are made to cover deductible medical expenses.
