Monitoring your employees’
retirement plan is an important fiduciary responsibility. Year end is a good time to give your
retirement plan a check up. The
following FAQ’s may help:
A) Does the plan have a fidelity bond? Has it been updated for the required
coverage?
Each plan must have a fidelity
bond, which is different than fiduciary liability insurance. Coverage must be based on the plan’s net
assets as of the beginning of the year, with limits ranging from $1,000 to
$500,000 per plan official.
B) Has the plan complied with the IRS rules
and regulations -- for example: updating the plan document for recent law changes
and timely depositing employee elective deferrals?
The IRS provides a checklistfor 401(K) Plans and also one for 403(b) Plans. These checklists guide employers through common compliance issues. The IRS also provides “fix-it guides” for
correcting common compliance deficiencies.
C) Does the plan have an audit requirement?
Plans with more than 100 eligible
participants as of the beginning of the plan year generally require an audit.
D) Is the plan required to file a Form 5500?
Plans must generally file a
Form 5500—Annual Return/Report of Employee Benefit Plan, with limited
exceptions.
E) Have participants of the plan who are age
70-½ or older been notified regarding the minimum distribution requirement and
amount.
Required minimum distributions
(RMD) are generally due by December 31, for those participants who are 70-½ or
older. The plan administrator or the
trustee is generally responsible for notifying the participant of the RMD
requirement and amount.
F) Has the plan administrator received all fee
and expense disclosures from contracted service providers (CSP)?
CSPs are required to disclose
in writing the dollar amount of fees received from the plan or the schedule or
formula used to determine the fee payment amounts. The CSP must notify the plan sponsor in
writing within 60 days of any changes in the plan fees.
G) Have the participants been notified of the
fees and expenses paid during the year?
The plan sponsor is required
annually to provide all participants with written details about investment
fees, plan fees, and other fee information.
The above information is
general in nature. Contact your CPA if you need more assistance with your retirement plan check-up.
Daria Cruzen, CPA, MBA
Manager—Audit Department
