Fiduciary responsibilities for an employee benefit plan

Many companies offer retirement plans, which is both rewarding and challenging. Managing a plan requires certain actions and involves certain responsibilities that make the person or entity performing them a fiduciary. Fiduciaries play an essential role and are subject to standards of conduct because they act on behalf of the participants. Their responsibilities include: Acting …

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IRS compliance testing: 415 limits testing

To ensure employee benefit plans do not violate certain standards that the DOL and IRS believe are important, plans are subjected to annual compliance tests. These tests are designed to make sure the amounts employees are deferring is within certain maximum limits and that plans are not operating in a manner that discriminates against certain …

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Understanding automatic enrollment in your 401(k) plan

We’ve all been there: starting a new job. The amount of information and paperwork can be overwhelming. It’s no surprise that reading up on and enrolling in a 401(k) plan isn’t at the top of everyone’s priorities. What may be surprising is that about half of all households age 55 and older have no 401(k) …

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A guide to ERISA fidelity bonds for employee benefit plans

The Employee Retirement Income Security Act (ERISA) has rules and regulations in place to protect private sector employee benefit plans from risk of loss. ERISA section 412 and related regulations (29 C.F.R. § 2550.412-1 and 29 C.F.R. Part 2580) require that fiduciaries and any person who “handles funds or other property” of an employee benefit …

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Voluntary fiduciary correction program

Throughout the administration of 401k plans, employers may at times run into fiduciary violations under the Employee Retirement Income Security Act (“ERISA”). If this happens, you may be eligible to apply for voluntary relief from enforcement actions, including assessments of civil monetary penalties through the Voluntary Fiduciary Correction Program (“VFCP”). The VFCP was designed to …

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Importance of Minutes as Evidence of Corporate Governance

Corporate governance is how a company polices itself and employees. It is intended to increase the accountability of the company, serve as a preventative measure, and help build transparency and trust. Corporate governance as it relates to plan administrators involves meeting your fiduciary responsibilities. Under the Employee Retirement Income Savings Act (ERISA), meeting your fiduciary …

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Determination Changes Impacting Qualified Retirement Plans

A determination letter is a formal document from the Internal Revenue Service (IRS) that declares a retirement plan to be operating within the Employee Retirement Income Service (ERISA) guidelines. If the plan meets all the requirements, it becomes certified as a qualified plan and is then eligible for applicable tax benefits. Earlier this year, the …

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The Importance of Knowing Your Plan’s Definition of Compensation

As I reflect on my last 401k audit season, I remember running into some operational issues that were a result of plan administrators not using the correct form of compensation, as defined by their plan document, while calculating employee and employer contributions. Using the correct form of compensation while making contributions is important because if …

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Investment Policy – Why and What to Include?

An investment policy is created by an investment committee (those charged with making investment decisions for a retirement plan) to help establish and record its own policies in order to assist in future decision-making or to help maintain consistency of its policies by future committee members/trustees or to clarify expectations for prospective money managers who …

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Compliance for Small Company Employee Benefit Plans

As another employee benefit plan season draws to a close, I was reflecting on the many compliance errors that we find each year while auditing plans. The plans that require audits are typically larger employers with over 120 employees. These plans are typically administrated by professionals with significant experience in their fields. And yet, due …

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