Monday, January 5, 2015

Retirement plan check-up

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