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Can I offer a 401(k) plan to my employees in New Mexico? What are the requirements?

Yes, you can offer a 401(k) plan to your employees in New Mexico. However, there are certain requirements that you must fulfill.

Requirements for Offering a 401(k) Plan in New Mexico

To offer a 401(k) plan in New Mexico, you must comply with the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). You must also ensure that your plan meets the requirements of the New Mexico Uniform Prudent Investor Act.

Here are some of the requirements you must fulfill:

  1. Eligibility: You must determine which employees are eligible to participate in the plan. Generally, employees who are at least 21 years old and have worked for you for at least one year must be allowed to participate.
  2. Contributions: You must decide how much you will contribute to the plan and whether you will match employee contributions. The maximum contribution limit for 2021 is $19,500, and employees who are 50 or older can make catch-up contributions of up to $6,500.
  3. Vesting: You must determine how long employees must work for you before they are fully vested in the plan. Vesting refers to the amount of time an employee must work for you before they have a non-forfeitable right to the contributions you make to their account.
  4. Fiduciary Responsibility: As the plan sponsor, you have a fiduciary responsibility to act in the best interests of your employees. This includes selecting and monitoring investment options, ensuring that fees are reasonable, and providing employees with information about the plan.
  5. Reporting and Disclosure: You must provide employees with information about the plan, including the plan document, summary plan description, and annual reports. You must also file annual reports with the IRS and the Department of Labor.

For more information on offering a 401(k) plan in New Mexico, you may want to consult with a financial advisor or a qualified attorney.

Note that there are other retirement plan options available in New Mexico, such as the Alternative Retirement Plan [3.1] for employees of certain state educational institutions and regular membership continuation [3.2] for certain transferred employees. However, if you want to offer a 401(k) plan, you must fulfill the requirements listed above.

[2.1] and [4.4] are not relevant to your query, and [5.1] pertains to tuberculosis test requirements for cattle and bison, which is not related to your question.

Source(s):
Jurisdiction

New Mexico