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 …
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 …
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 …
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 …
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 …
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 …
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 …
Hearing the news of a compliance testing failure sounds rather daunting. The severity of a compliance testing failure varies by case, and correcting it may not be as difficult or costly as it sounds. Throughout compliance testing, traditional 401(k) plans must be tested to ensure that contributions made by and for nonhighly compensated employees (“NHCE”) …
The search is on for an accounting firm to perform the required audit of your employee benefit plan. In determining which proposal to accept, one must question the difference between the low end and the high end of the pricing spectrum. The intent of this blog is not to infer that everyone should hire the …
As a plan sponsor, chances are that at some point throughout the course of business, the employee benefit plan that you manage has encountered plan forfeitures. Forfeitures typically result from the termination of service by an employee who was not fully vested in his or her employer contributions. The confusion related to forfeitures doesn’t revolve …