Shake the Tree! Checking the Health of Your Retirement Plan Administration

Plan sponsors may want guidance on how to implement a self-audit program. This is especially useful for small plans that may not be subject to ERISA’s annual audit requirement but need review of their processes and financial statements. Two common errors found by the IRS are improper exclusion of eligible employees from the plan and use of an incorrect definition of compensation. Failure to process involuntary cash-outs and required minimum distributions, ineligible hardships, or other in-service distributions are other shortcomings in plan administration that may be identified in a self-audit.  Trust—but confirm!

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Related Content

• Form 5500 Employee Benefit Plan Audits
  See how most employee benefit plans require an annual audit of the plan’s financial statements that become part of the plan’s Form 5500 annual report. The auditor, who must qualify as an Independent Qualified Public Accountant, must form an opinion whether the plan's financial statements and their accompanying notes are fairly presented in conformity with generally acceptable accounting principles. 

• EPCRS and VFCP Plan Correction Resource Kit
  Fix mistakes if they happen. IRS’s Employee Plans Compliance Resolution System provides you the ability to correct many types of plan administration mistakes. The Voluntary Fiduciary Correction Program can do that for certain fiduciary errors. Either of these may come to light in a self-audit or an annual audit. Even significant operational failures can be self-corrected if completed within three years of the year that the failure occurred.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.      

• Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
  Stay informed on new developments.
  • Retirement Plans. IRS issues the 2023 cumulative list of changes in plan qualification requirements for preapproved qualified defined contribution plans. The list identifies the changes that IRS will consider when reviewing plan documents for the fourth remedial amendment cycle, which began February 1, 2023. R.S. Notice 2024-3.
  • Health and Welfare Plans. Updating its “Dear Colleagues” letter, issued on March 13, 2024, to address a cybersecurity incident impacting Change Healthcare, a unit of UnitedHealthcare Group, HHS’s Office for Civil Rights updates FAQs that address the investigation of certain cybersecurity incidents. Change Healthcare Cybersecurity Incident FAQs.

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