Hardship Distributions Requirements

If your plan allows for hardship distributions, as a Plan sponsor you are required to verify that proper evidence has been obtained which verifies the participant has immediate and necessary need for the distribution. The Internal Revenue Service (“IRS”) has stated that certain expenses are considered immediate and necessary. These expenses include the following: • Medical …

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Fees to Fix 401(k) Operational Failures

Providing a 401(k) plan for company employees is a valuable benefit for them.  The benefit to the Company is hopefully that it attracts and retains valuable employees.  The cost to the Company on the surface might appear to just be fees paid to service providers who help administer the plan such as hold plan investments, …

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Importance of Declining Enrollment Form

Many employers that participate in 401(k) plans do a very good job at keeping paperwork for participants who enroll in the plan. Where deficiencies occur is when the participant does not wish to participate in the plan but does not provide any additional paperwork showing they have declined enrollment.  It is important that the employer …

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Fraud in a 401k Plan?

Some people think that 401k plans have little exposure to fraudulent activity.  The truth is, whenever there is an incentive, the opportunity, and the rationalization to commit fraud, then fraud should definitely be considered by your Company. The following risks, and mitigating recommendations, will be helpful to the following persons (but not limited to1): • Director …

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Establishing an Investment Committee for 401(k) Plans

Plan sponsors have a fiduciary responsibility to manage the investment options offered to participants. ERISA requires that these investments be monitored on an ongoing basis for appropriate use and continued prudence. In order to ensure this happens, plan sponsors should establish an investment committee to oversee and manage all investment processes for the plan. The …

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Streamlining of the Automatic Enrollment Process

Now more than ever it is imperative that the American family starts taking a closer look at their financial future. Now more than ever it is up to the nation to offer easier ways for the American family to start saving. The government is continuously working on finding more efficient ways for small businesses to …

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Guide to a 401(k) Audit

As a plan sponsor you may be required to engage a CPA firm to perform an audit of your 401(k) plan. As a general rule, the audited financial statements are required to be filed with your Form 5500 if you have 120 or more eligible employees. This is the general rule and your specific situation …

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Fiduciary Responsibilities – Best Practices

Companies that sponsor 401(k) plans for their employees can sometimes underestimate the responsibilities that they should perform in order to properly monitor the plan and ensure that they are not exposed to claims that they have failed their fiduciary responsibilities. Although a significant amount of the plan administration can be performed by third-party services providers …

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Auto Enrollment: Improving 401(k) Nondiscrimination Results

Has your company been having problems passing your 401(k) nondiscrimination tests? One thing you may consider as a fiduciary is discussing automatic enrollment with your Third-Party Administrator. You may be wondering if the extra costs of additional employer matching contributions plus costs of additional implementation and administration expenses are worth the trouble. However, considering the …

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Partial Plan Termination

If your company has had a significant employer-initiated reduction in workforce and sponsors a 401(k) plan, it is important to consider whether a “partial termination” of the retirement plan has occurred. When a partial termination has occurred, all participating employees who had a severance from employment during the period must be fully vested in their accrued …

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