As the end of the year is fast approaching it is a good time for retirement plan sponsors to review their retirement plans. Here are some tips retirement plan sponsors should consider:
Verify All Qualified Participants
This is a common error made by sponsors who forget to add their participants that have already met the eligibility requirements. Plan sponsors should review the census and verify anyone who is qualified to participate in the plan.
Census Preparation
Retirement plan sponsors should prepare the census information before the calendar year ends. Census information includes participant’s name, date of birth, date of hire, date of termination (if applicable), hours of service, and compensation.
Review Special Deferral Election of Bonuses
Retirement plan sponsors often provide bonuses towards the end of the year. Plan sponsors should verify whether the plan allows for special bonus deferral election, which enables participants to defer up to 100% of bonuses without impacting their current deferral election.
Implementation of Safe Harbor Design
If a safe harbor design is implemented, the retirement plan sponsors should notify the participants by December 1st. A safe harbor design requires a fully vested contribution that gives participants a contribution in the form of profit sharing or matching contribution.
Review ERISA Bond Coverage and Fiduciary Liability Insurance
All retirement plans are required to have ERISA bond to protect plan assets from theft. Retirement plan sponsors should verify if its plan has an ERISA bond in place. Retirement plan sponsors should consider obtaining fiduciary liability insurance, which is optional. If fiduciary liability insurance is not obtained, the plan sponsors will be personally liable. LSL offers review of your retirement plan and provides referrals for ERISA bond and/or fiduciary liability insurance.
Review Plan Fees
Retirement plan sponsors have access to information about fees charged to the plan due to the new fee disclosure regulations implemented. LSL can help benchmark and review the fees, along with comparing price quotes from competing plan providers.
Review Your Plan Providers
It is the retirement plan sponsors’ fiduciary responsibility to make sure they are working with experienced and qualified plan providers. A good CPA firm like LSL, who is a member of the AICPA’s Employee Benefit Plan Audit Quality Center, offers review and consultation of the work completed by the plan providers.
These are some of the tips that each retirement plan sponsor should consider at the end of the year to reduce any potential problems that may arise in the following year. If you have any questions regarding your retirement plan, please contact Maria Arriola at 714.569.1000.
Click here for more details about our ERISA Plan Audit services.
By: Franklin J. Park
