Step 1:
One thing that concerns me most when I do a plan audit is the liability of the plan sponsor. So, in the next few posts, you’ll get information about how to reduce your exposure and liability with plan participants, the Department of Labor and the IRS. The first step is to take a look at the way the plan is structured – whether it’s brand new or has been in place for years. Read the rest of this entry »
The much-anticipated ruling by the DOL regarding fee disclosure for service providers reached an “interim final regulation” on July 16, 2010. All service providers will need to comply with the ruling by July 16, 2011, regardless of effective agreement dates. The final requirements varied somewhat from the proposed requirements. Here is a summary of the final regulation:
1. Fee disclosures must be made in writing, although a formal written contract is no longer required.
2. Service providers need to make required disclosures for previous contracts as well as new or renewal agreements.
3. The entire rule applies only to pension plans, not welfare benefit plans. Parts of the rule apply to 401(k) and ERISA 403(b) plans.
The rule does not apply to IRAs, Simple IRAs or SEP IRAs.
4. The covered service provider must expect to receive $1,000 or more of direct or indirect compensation. Covered services include:
fiduciary services, recordkeeping or brokerage services and ‘other’ services where an affiliate or subcontractor receives indirect compensation.
5. Ruling applies to all compensation, direct or indirect.
6. The full disclosure requirement related to compensation will cover and thus eliminate the need for disclosure of conflicts of interest.
7. Providers of multiple services are required to disclose the cost of recordkeeping services separately.
8. The excise tax for engaging in a prohibited transaction applies to covered plans and thus amends the 4975 regulation.
9. As long as the provider acts in good faith with reasonable diligence and corrects any error within 30 days of discovery, there is
no violation of the ruling.
The clarity of the ruling is welcome news to those of us who have been following the progress since it was proposed in 2007.
Every year you should review your requirements for operating your 401(k) retirement plans. The IRS has an online checklist to help you keep your plan in compliance with many of the important rules.
You can find it here: http://bit.ly/bIU7ed
A failure to timely remit contributions and loan repayments
Problems with Discrimination Read the rest of this entry »
This is Part 2 in our series Five Ways to Lose Your Tax Exempt Status.
One of the surest ways to sow discord among employees is to cause them to have a large unexpected tax bill. This type of blunder will likely get a similar response to not making payroll. The maintenance of the tax exempt status of 401(k)’s requires some effort but prompt and appropriate action will prevent an unwanted exodus of personnel. The following mentions common plan issues that have tax implications and some useful tips for staying out of trouble. Read the rest of this entry »
Read here: http://bit.ly/6TH9Le “The Rap on Wrap Plan Documents”
Issued by the AICPA Employee Benefit Plan Audit Quality Center January 15th, 2010
On January 14, 2010 the Department of Labor (DOL) issued final regulations on the Definition of Plan Assets – Participant Contributions which establishes a safe harbor period for certain employers to deposit participant contributions on a timely basis. Read the rest of this entry »