Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.
Many employers do not operate their retirement benefit plans correctly due to a failure to abide by the regulations of their plan document. This practice can lead to plan disqualification, which is a disadvantage to the employer and employees. Below are a few factors to consider when operating a retirement plan:
- Notices: Employers should make sure all notices are given to employees in a timely manner. (ie safe harbor, QDIA, blackout…etc)
- Eligibility: Employers should ensure that employees are allowed to participate in the plan when they become eligible.
- Employee Contributions: Employers need to deposit contributions in accordance with DOL regulations, to ensure they are on time.
- Withdrawals: Loans and hardships should be properly administered according to the plan document.
Although the above list is a short one, it provides employers with an idea of tasks associated with operating a retirement plan. Good service providers always verify that they assist plan sponsors with these tasks. The IRS has a Fix-It-Guide that assists in finding, fixing and avoiding common plan errors
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