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.
Over the next few weeks 401kBasics is going to review the common mistakes that plan sponsors make in administering their plan, how to find the mistake and how to correct the mistake. The fourth common mistake is failure to make employer-matching contributions to all appropriate employees under the terms of the plan.
- How to Find the Mistake: Review the plan document to determine the correct matching contribution formula and compare it to what is used in operation.
- How to Fix the Mistake: Base correction upon the plan’s terms and other applicable information at the time of the mistake. The correction programs available include SCP, VCP and Audit CAP, depending upon the situation.
This mistake can be avoided in the future by ensuring that plan administrators have adequate and sufficient employment and payroll records to make calculations. For more information please refer to potential mistake number 4 on the IRS 401(k) Fix-It Guide.
This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.