Offering a 401(k) Plan: Trick or Treat?

Offering a 401(k) plan to your employees does not need to be scary! Your plan provider should be helping you stay compliant and out of the IRS’s haunted house.

Here are 7 of the top compliance concerns we hear at Beneco:

  1. Fiduciary Responsibilities and Plan Fees.

    Employers are required to pay only reasonable and necessary fees from 401(k) plan assets. Not sure what your plan fees are, or if they are reasonable and necessary? We recommend getting quotes to compare your current fees every three years.

  2. Employee eligibility.

    Another common compliance issue with 401(k) plans is allowing employees to participate who are not yet eligible or excluding employees who are eligible to participate. Who is monitoring this with your employees?

  3. Required minimum distributions (RMD).

    Are you monitoring the age of your participants for RMD’s? When you reach the age of 70.5, you are required to withdraw a portion from your retirement accounts each year.

  4. Payroll deductions contributed in a timely manner.

    Depending on the size of your business, there are different requirements for when payroll deductions need to be deposited to your account. This is one of the more common sources of DOL audits.

  5. ADP/ACP nondiscrimination tests.

    Are you going to pass your ADP/ACP tests this year? If you plan ahead this should not be an end of the year surprise!

  6. Large plan audits.

    If your company is growing and you have reached 100 eligible plan participants, you are now required to have an outside 401(k) plan audit.

  7. Plan corrections.

    The good news is that the IRS allows for plan corrections if you made a mistake with your 401(k) plan! Hopefully, your plan provider will help you through the process and help avoid the same issues in the future.

If any of these concerns are keeping you up at night, or you would like a free comparison of your retirement plan fees, let us know and we’ll be happy to help!