Has Your Retirement Plan Had Its Annual Check-Up?


By Jeanne Barrett

The importance of reviewing your retirement plan on an annual basis for common operational failures should not be underestimated. Your employees are counting on the benefits provided by the retirement plan, and protecting these tax benefits is an important duty assumed by business owners when they adopt a retirement plan and assume the fiduciary duty that comes along with it. The IRS has developed specific checklists, which differ by plan type, to allow employers to perform a quick review for operational compliance. The checklists do not cover all plan requirements, but is an easy way to begin your plan check-up. A sample of the checklist questions are as follows:

1. Have you identified all eligible employees?
2. Are participants receiving their contributions as specified in the plan?
3. Did you deposit the contributions in your employees’ accounts on a timely basis?

Your answers to these questions might indicate that your plan is operating in accordance with the plan document and current regulations or might indicate that the plan has an operational issue that needs your attention. The IRS frequently finds the following mistakes in retirement plan examinations:

• Not covering the proper employees
• Not giving employees required information
• Not depositing employee deferrals on time
• Not depositing employer contributions on time
• Not following the terms of the plan document
• Not limiting employee deferrals and employer contributions to the proper maximum limits

In addition to an annual review of your plan, it is also a good practice to keep current on law changes and ensure that your plan is updated accordingly with these changes. You can also obtain an independent review of your plan to see if there are any items that might have been overlooked.

Your employees are your most valued assets. A regular check-up can help to ensure that everything is running as intended to provide the benefits that are promised.

To obtain the full electronic version of each checklist, visit: www.irs.gov/retirement

© 2011 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.