Does your Company offer a retirement plan? If so, there are multiple ways a plan can fail administratively. Sometimes these errors can be self-corrected and other times the IRS/DOL imposes fines on the Plan Sponsor to correct the plan errors. If the errors are significant enough, the plan could be deemed as failed and become disqualified which would result in unintended tax consequences for all plan participants.
What should the employer do to ensure this does not happen to their Company’s retirement plan? To begin with, designate the head Human Resource person or someone knowledgeable of plan matters as the champion of the plan. The IRS, when they come to audit, will want to see that the champion understands the plan document and how to gather all the requested supporting documentation for the plan year under audit. Consider hiring a reputable third party plan administrator that understands the complexities of plan management so your Company keeps up with all the required filings and notices. Read up on the latest IRS fix-it guides for common plan errors in 401(k) plans, 403(b) plans, SARSEP plans, SIMPLE IRA plans or SEP plans. Meet with your investment advisor and make sure they are knowledgeable to give advice to retirement plans. Not all investment advisors are fiduciary plan advisors. And finally, look to your CPA for any other questions you may have. Stancil’s ERISA auditors are also available to take a look at your plan and provide advice on compliance best practices.