Webinar Slides: Common Errors in Qualified Plans

CBIZ & MHM Executive Education Series™ Common Errors in Qualified Plans

Presented by: Hal Hunt, Cindy Dwyer & Craig Kovarik of Husch Blackwell

August 19, 2014

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The information in this Executive Education Series course is a brief summary and may not include all

the details relevant to your situation.

Please contact your service provider to further discuss the impact on your business.

Disclaimer


Today’s Presenters

Hal Hunt, CPA Shareholder 913.234.1012 | [email protected]

Hal leads MHM’s Employee Benefit Plan (EBP) Audit Practice. With over 25 years of diverse experience with EBP accounting, auditing and compliance issues, he is also a member of the firm’s Professional Standards Group as EBP subject matter expert. As the EBP National Practice Leader, Hal is responsible for providing internal training, along with providing technical support to engagement teams, serving as engagement quality reviewer and developing resource tools for our EBP audit professionals. He served on the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC) Executive Committee and is currently a member of the EBPAQC ESOP Task Force.

Cindy Dwyer, CPA Shareholder 913.234.1022 | [email protected] Cindy is the President of MHM Retirement Plan Solutions and a Shareholder of Mayer Hoffman McCann P.C. She supervises staff, oversees technical research, and provides quality control services. She has previously served as the national Chairperson of the American Institute of Certified Public Accountants Employee Benefits Technical Resource Panel (TRP) and currently serves as an advisory member of the TRP. Additionally, Cindy has been a recurring speaker at the American Institute of Certified Public Accountants National Conference on Employee Benefit Plans. Cindy is also a committee member and former chair of the Employee Benefits Institute sponsored by UMKC School of Law.


Today’s Presenters

Craig Kovarik Partner, Husch Blackwell 816.983.8249 | [email protected] Craig is a partner of Husch Blackwell's Employee Benefits and Executive Compensation Practice Group and counsels clients on complex ERISA, tax and other legal matters. He has significant experience in pension, 401(k), employee stock ownership plans (ESOP) and other qualified retirement plan matters; supplemental retirement, deferred compensation and other nonqualified retirement arrangements; stock options, restricted stock and other equity-based compensation plans and executive employment agreements; and insured and self-insured medical, dental, life and other welfare-benefit plans.


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Today’s Agenda

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Overview and Background Top Ten Failures Found in VCP Other Common Failures What to Expect When You Are Expecting the IRS or DOL How Failures Affect the Annual Plan Audit Internal Controls

OVERVIEW AND BACKGROUND


Qualified Plans

Defined contribution Account based plans 401(k), profit sharing, 403(b), money purchase pension,

and ESOPs Defined benefit pension Traditional pension plans (e.g., final average pay) Cash balance pension plans


Non-Qualified Plans

Plans that are not intended to satisfy section 401(a) or 403(b) of the U.S. Internal Revenue Code

Section 409A deferred compensation agreements Section 457(b) and Section 457(f) plans for tax

exempt entities


Government Regulation

Internal Revenue Service / Department of Treasury Department of Labor Pension Benefit Guaranty Corporation (PBGC) ERISA pre-emption of state laws Church plans and governmental plans


Internal Revenue Service

“Qualified” plan status Tax favored status Deductible employer contributions Deferred taxation of employee accounts


IRS Enforcement

IRS Audits Limited IRS reviews (aka compliance check) IRS determination letter program Participants complaints (?)


What is the #1 best way to comply with the terms of a plan and

operationally avoid most errors?


Read the plan!


Mistakes Do Happen

They can almost always be fixed!


Employee Plans Compliance Resolution System (EPCRS)

General principle: Correct the mistake so that the plan and participants are in the same position they would have been in absent the mistake.



Three component programs SCP: self-correction without IRS involvement VCP: self-correction with IRS approval and compliance

fee CAP: formal closing agreement following audit


EPCRS – What’s your Choice?

Audit Cap

Voluntary Correction

Self Correction

Cost of Correction

IRS Fees $0

Time Involved



Document failures Inclusion of bad plan provision or absence of required

provisions Failure to timely adopt required plan amendments

Operational failures Failure to follow plan terms Retroactive plan amendment generally prohibited

Demographic failures Fail IRS eligibility or participation requirements



Significant vs. Insignificant Operational Failures Facts and circumstances Number of participants affected Years at issue Dollars at issue

Insignificant errors can be fixed under SCP at any time

Significant errors may be fixed: under SCP during 2-year window period Under VCP at any time



Correction includes “lost earnings” Actual earnings Earnings of plan as a whole Department of Labor earnings calculator Other reasonable method

TOP TEN FAILURES FOUND IN VCP


Top Ten Failures Found in VCP

#1 Failure to amend the plan for tax law changes by the end of the period required by the law


Adoption of Plan Amendments

“Plan Document Failure” – plan provision or absence of plan provision that, on its face, violates requirements under Internal Revenue Code

Failure to timely adopt discretionary or required plan amendments Discretionary amendments generally must be adopted no

later than last day of the current plan year Required amendments normally must be adopted no later

than last day of the current plan year unless deadline extended by IRS (remedial amendment period)

Prototype documents


Adoption of Plan Amendments (continued)

Adoption requires both signature and date Who has authority to adopt amendments (board,

officer, committee?)

Best Practice: Maintain a plan document book (both hard copy and electronic) which includes all plan documents, service contracts, SPDs, and key participant communication document. Review this document annually – like brushing your teeth!



#2 Failure to follow the plan’s definition of compensation for determining contributions


Plan Compensation (continued)

IRC Section 401(a)(17) – Limit on includible compensation (e.g. $260,000 for 2014)

IRS Section 401(c)(2) – Definition of earned income for self-employed persons

IRC Section 404(a)(12) – Definition for deductions IRS Section 414(q)(4) – Definition for determining HCEs IRC Section 414(s) – Definition for nondiscrimination testing IRC Section 414(u) – For veteran’s reemployment privileges IRC Section 415 – Maximum annual additions and benefits IRC Section 416 – Top heavy allocations



Safe Harbor definitions Non-safe harbor definition: Subject to

nondiscrimination testing Plan’s definition may not discriminate in favor of HCEs Compare average percentages of non-HCEs and HCEs

(plan definition divided by safe harbor definition) Average for each group and compare De minimis rule



Common Mistakes 1.Failure to follow plan’s definition of compensation

(e.g., treatment of stock option gains, imputed life insurance income, manual or off cycle paychecks)

2.Include (exclude) compensation from plan entry 3.Treatment of severance pay 4.Self-employment earnings 5.IRC 401(a)(17) limit – elective deferrals from pay in

excess of limit 6.Failure to coordinate HR and Payroll systems



#3 Failure to include eligible employees in the plan or the failure to exclude ineligible employees from the plan


Eligibility and Enrollment

Entry date issues (monthly, quarterly, semi-annually) Auto-enrollment and auto escalation Employment anniversary vs. fixed annual date for all

employees Employees paid on different payroll basis (weekly vs. bi-

weekly) Employee contribution elections How do you document employee initial elections? How do you document changes in employee elections? What happens if error is made but employee does not call this

your attention for many months or years?


Definition of “Eligible Employee”

Part-time employees Leased employees Student interns Temporary employees Employees of brother-sister companies or

subsidiaries


Treatment of Rehires

General rule: Once an employee satisfies the requirements for participation, the employee cannot be required to re-satisfy the eligibility requirements Key Concept: Once a participant, always a participant

Rehired employee should be allowed to restart participation effective on his or her date of hire (i.e., not the next Plan entry date unless Plan specifically provides otherwise)

Best Practice: Establish internal policy for handling rehires. Remember, your rehire policy for other employment purposes will likely be different from your policy for your retirement plan.



#4 Failure to satisfy plan loan provisions


Participant loans don't conform to the requirements of the plan document and IRC Section 72(p).

General Requirements

Limited to 5 years (exception for residential loans) Reasonable interest rate Meet dollar limit of IRC 72(p) Amortized in level payments of principal and interest at least

quarterly

Plan Loans


Exceptions for leave of absences May suspend repayments for up to one year while the

participant is on a leave of absence. May not extend the loan’s maximum repayment period. Upon return from leave of absence, must make additional

payments to ensure repayment within the five-year-period by either: increasing the payments over the rest of the loan, or keeping the payments the same, but making a catch up payment for

the missed payments during the leave of absence. Note: A plan may suspend loan payments for more than one

year for an employee performing military service. In this case, the employee must repay the loan within five years from the date of the loan, plus the period of military service.

Plan Loans


The plan administrator may allow for a “cure period” that would allow a participant to make up for a missed payment. The cure period cannot go beyond the end of the second quarter following the quarter in which the missed payment was due.

If the loan violated the plan document terms or IRC Section 72(p), the plan sponsor has two choices. It may be able to: Correct under VCP by requesting the amount of the loan to be taxed

in the year of correction request relief from reporting the loans as taxable distributions to

participants from the IRS under the VCP

Plan Loans

NOTE! Self-correction is not an option for this error.



#5 Impermissible in-service withdrawals.


In-Service distributions – other than hardship Common to have at age 59 ½ for all sources Certain sources may be available prior to age 59 1/2 Prior to age 59 ½ not available for:

401(k) Safe Harbor Qualified Non-Elective Source

Pre-Retirement Distribution


Hardship distributions were not properly made Reasons for failures Plan does not allow hardships Hardship made from ineligible source Neglected record keeping

Immediate and heavy financial need

Hardship Distributions


Reasons for failures (cont’d)

Watch for abuse/bad management Identical requests from multiple employees Only highly-compensated employees make requests Have rank-and-file been notified of this plan feature?

Electronic Hardship applications



Finding the mistake Review plan – ensure it allows hardships Review hardship procedures Review all hardship distributions

Ensure each one was completed according to the plan



Fixing the mistake Plan document does not allow for hardships

Retroactive amendment Hardships do not meet plan terms or IRC rules

Possible repayment to plan


Hardship distributions may be subject to the 10% early distribution tax on distributions

made prior to reaching age 59 ½.



#6 Failure to satisfy age 70 1/2 minimum distribution rules.

50% Excise tax SCP – need to make the distribution VCP– need to make the distribution and used to

request Excise tax waiver



#7 Employer eligibility failure

Employer adopts a plan that it legally is not permitted to adopt



#8 Failure to pass the ADP/ACP nondiscrimination tests under IRC 401(k) and 401(m)


ADP/ACP was not corrected timely ADP and ACP tests reasons for failures Not running the tests Misclassification of employees

Highly and non-highly compensated Ownership attribution rules

Not including all eligible employees in the test (non participating)

Definition of compensation Not understanding who the “employer” is

ADP/ACP Nondiscrimination Testing


Two methods to correct- when corrected late Qualified non-elective contributions (QNEC) One-on-one method (still requires a refund to HCEs)

Correction Within 12 months following plan year end – OK Otherwise, correct using EPCRS

ADP/ACP Nondiscrimination Testing

12/31/13

03/15/14 To avoid excise

tax 12/31/14

Self Correction Period

12/31/16

Must use VCP for correction

QNEC or refund with one-on-one method required

QNEC or Refund



#9 Failure to properly provide the minimum top-heavy benefit or contribution under IRC 416 to non-key employees

Corrective contribution Vesting correction



#10 Failure to satisfy the limits of IRC 415

#10 Failure to satisfy the limits of IRC 415

Not as common as once was Lesser of 100% of Compensation or $52,000 (2014 indexed)

OTHER COMMON FAILURES


Other Common Failures

Deduction of incorrect amounts (e.g., payroll system does not align with plan’s definition of compensation)

Failure to withhold from irregular payroll checks Failure to deduct from discretionary or one-time

bonuses Failure to implement an employee’s election to

change his or her deferral amount IRS general correction principle Employer must contribute one-half of the lost deferral

opportunity

Employee Contributions


Employee Contributions (continued)

Deductions from “regular pay” after severance from employment 2½ month rule Payment is regular compensation for services Payment would have been paid to employee prior

severance from employment if the employee had continued in employment



Deductions from leave cash outs and deferred compensation 2½ month rule Accrued sick leave, vacation or other leave

Deductions from “other post-severance payments” All other amounts excluded even if paid within 2½ months For example, severance pay is not eligible



Termination is year 1 but paid in year 2 Include if satisfy the definition of compensation and paid

within the 2½ month period? Exclude because individual is not an “eligible employee”

in year 2? Timely correction of excess contributions and excess

aggregate contributions



DOL Rules and Regulations Earliest date contributions can be segregated from general assets, but No later than the 15th business day of the month following the month in

which the contribution is withheld

15th business day is not a safe harbor! Small plan safe harbor of 7 business days is not a safe harbor

for large plans Rules apply equally to participant contributions made to defined

benefit and health and welfare plans H&W plans look to 90 days

If participant loans are processed through payroll same rules apply

Timely Deposit of Elective Deferrals


Voluntary Fiduciary Correction Program – it’s easy to use Fact Sheet can be found at:

http://www.dol.gov/ebsa/faqs/faq_vfcp.html#section2 VFCP Model application form:

http://www.dol.gov/ebsa/calculator/2006vfcpapplication.html Prepare VFCP Checklist:

http://www.dol.gov/ebsa/calculator/2006vfcpchecklist.html Calculate the lost earnings on the late deposits and allocate them back

to the participants. Online calculator: http://askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx) or by using the returns on the actual funds, which ever is higher


http://www.dol.gov/ebsa/faqs/faq_vfcp.html

http://www.dol.gov/ebsa/calculator/2006vfcpapplication.html

http://www.dol.gov/ebsa/calculator/2006vfcpchecklist.html

http://askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx


Excise Tax 15% for the prohibited transaction and File

Form 5330 OR May qualify for relief from the excise tax and no Form

5330 is required Late deposits were transmitted not more than 180 days from when

withheld The Employer has NOT taken advantage of the VFCP program

during the 3 years prior to the submission Must send a notice to the participants within 60 days of filing the

VFPC – model notice – However waived if: Excise tax is $100 or less, The “excise tax” is paid to the plan, Form 5330 or detailed computation provided to DOL



Online calculator and display of IRS rates and factors on EBSA website.

Model Application Form available on EBSA website. Includes online compliance assistance tools and

reduced documentation requirements.

DOL Audit

VFCP is Easy to Use


Calculation of match using wrong definition of compensation (e.g., exclude bonus)

Failure to follow plan’s matching formula Calculation of match on payroll by payroll basis vs. calendar

year basis Employer’s practice is not consistent with the plan document For example, employees who stop and restart contributions during the

year

Failure to make year-end true-up match Making true-up contributions for those employees who max

out during the year but not others


Employer Matching Contributions



Failure to track hours of service Two method to credit hours: (1) hours method or (2)

elapsed time method Hours method Actual hours worked Equivalency method (9 hours per day, 45 hours per

week or 190 hours per month)

Vesting Issues


Vesting for Rehires

Once vested, always vested Never lose credit for prior of service Example: Employee has 2 yrs. of vesting service at

termination and is rehired: employee will have 2 yrs. of vesting service

Break in service rules If 5-year break in service, future service will not be taken

into account for purposes of determining old account benefit; however, old service counts for future benefit


Vesting for Rehires (continued)

5-year break in service If employee has a 5-year break in service, future service

will not be taken into account for purposes of determining old account benefit

However, old pre-break service counts for future benefit


Vesting for Rehires (continued)

Forfeiture of non-vested account balance Earlier of: 5-year break in service or distribution of

participant’s vested balance Upon rehire, employee has 5 year period to repay

prior account balance and have forfeited balance restored Does plan administrator have obligation to notify

employee at the time of rehire?



100% vesting required upon plan termination Complete termination vs. partial termination Partial termination Semi-bright line test: 20% reduction in workforce Multiple plan yrs. Multiple transactions Formula for determining 20% reduction

Partial Plan Termination



Failure to maintain historical records (yrs. of service, eligible compensation)

Changes in third party record keepers Overpayment of pension benefits due to

administrative errors Retention of plan documents is critical

Calculation of Pension Benefit



Distributions upon attainment of Normal Retirement Age Participant consent required until later of:

Participant’s attainment of normal retirement age Termination of employment Participant’s completion of 10 yrs. of participation

Lost participants Immediate vs. deferred distribution IRA rollovers

Minimum required distributions (age 70½) Hardship withdrawals

Distribution of Plan Benefits

WHAT TO EXPECT WHEN YOU ARE EXPECTING

–The IRS (or DOL)


Audit Triggers

List various audit triggers Late deposits reported on 5500 No Fidelity bond ER Securities – value NOT changing Lots of $ in “other”


Plan document Trust agreement Summary plan description Summary annual report Form 5500 for the last 3 years IRS qualification letter Fidelity bond

DOL Audit

What to Expect During an IRS Audit


Identity of the fiduciaries Service provider contracts Plan’s written investment policies Fiduciary liability policy Payroll records, ledgers, journals, cancelled checks

DOL Audit

Other Information


What to Expect during a DOL Audit

Employee Benefit Security Administration (EBSA) Fiduciary responsibilities Prohibited transactions Civil and criminal enforcement


Sample Request Letter


Sample Document and Information Request

• Signed plan documents • Signed amendments • Signed trust agreements, if applicable • Summary Plan Description • Summary of Material Modifications • Loan policy document • Most recent IRS Determination Letter • IRS Form 5500 series , including all schedules– last three years • 5310 filings for prior plan mergers, consolidations, or spin-offs, for prior five years • Audited financial statements • Plan’s payroll records/contribution reports • Plan’s financial records (trust reports, bank account statements, allocation records)

The examiner will need copies of the items identified below and, in addition, may request copies of other information reviewed. It should be noted that additional

records might be requested following a review of these items.

• Loan records • Latest fidelity bond • Individual benefit statements that have been

issued to two participants • Copy of latest fiduciary liability policy • Most recent participant allocation statements • Most recent Summary Annual Report • Participant Loan Promissory Notes • Any / all corrective actions/ government filings • Collective bargaining agreements relating to plan

participation • Investment due diligence materials • Signed service provider contracts and all invoices

and billing statements

HOW FAILURES AFFECT THE ANNUAL PLAN AUDIT


No plan is perfect. Noncompliance happens. Plan administrator is responsible for plan’s tax

qualified status. Plan management is responsible for maintaining

compliance of the plan which includes processes performed by third party service providers.

Auditor’s responsibility is to assess the impact of the compliance violation in the context of the financial statement audit.

Responsibilities


Lack of understanding of plan provisions Complex plan terms & definitions (i.e. compensation) Dramatic shift in number of individually designed plans

to prototype plans Pressure on service providers to control costs Acquisitions and dispositions (personnel & benefits) TURNOVER – staff at plan sponsor or at service

provider Failure to consult legal counsel Ineffective internal control

Root Causes of Operational Violations


Process to monitor new legislation and impact on plan document and operations. Typically engage ERISA counsel to monitor law changes and draft required amendments to the plan.

Process to timely receive required amendments to a prototype document. Process to ensure that amendments are timely executed.

Maintenance of signed and dated copies of plan document and any amendments.

Review of plan document and Summary Plan Description (SPD) to ensure that terms match.

Plan Sponsors – Best Practices


Audit Implications

Errors could result in a material impact on the financial statements

Determination of error and correction; can be very time consuming and costly

Impact on timely completion of the audit


Nonexempt Transaction – Note Example

(10) Nonexempt Transactions Certain employee contributions and participant loan

repayments were not remitted to the trust within the time frame specified by the Department of Labor’s Regulation 29 CFR 2510.3-102, thus constituting nonexempt transactions between the Plan and the Company for the year ended December 31, 20X3. Plan management corrected the deposits including lost interest on September 20X4.


Supplemental Schedule - Example

Schedule 1ABC COMPANY 401(k) SAVINGS PLAN

EIN: 99-XXXXXXXPlan Number: XXX

Schedule H, Line 4a – Schedule of Delinquent Participant Contributions

Year ended December 31, 20X3

Participant contributions Total that constitute nonexempttransferred late to Plan prohibited transactions Total fully

Check here if late Contributions correctedparticipant loan Contributions Contributions pending underrepayments are not corrected correction in VFCP and

included: X corrected outside VFCP VFCP PTE 2002-51

$

See accompanying independent auditors’ report.


Noncompliance – Impact on the Audit

If we become aware of information concerning an instance of noncompliance or suspected noncompliance with laws and regulations, we should obtain: An understanding of the nature of the act and the

circumstances in which it has occurred and Further information to evaluate the possible effect on the

financial statements. Discuss with management and, when

appropriate, those charged with governance Evaluate implications of noncompliance in

relation to other aspects of the audit Auditor’s risk assessment Reliability of written representation


Determine if there is a related internal control deficiency. Severity of the deficiency Impact on the audit

Consider the following in communication with those charged with governance: Compliance failure

Description of the related internal control deficiency Description of the potential impact on the financial statements and

level of deficiency Deficiency/Significant Deficiency/Material Weakness

Uncorrected misstatements Corrected misstatements

Noncompliance – Control Deficiency


Noncompliance – Written Representation From Management

Consider the following in the representation from Plan management: Description of management’s understanding of the

operational failure Description and status of the correction/intended correction Status of consultation with ERISA legal counsel Assessment of the materiality of any unrecorded

adjustments to the financial statements

“We are aware of certain operational, plan document, or demographic issues that, if not properly corrected, could be treated by the IRS as

qualification failures. We will be taking steps to correct these issues. If necessary, the tax qualification issues will be resolved directly with the IRS.

Accordingly, we believe that the plan will retain its tax-qualified status.”


Noncompliance – Note Disclosures

Management to consider the following additional note disclosures: Description of the operational failure Description and status of the correction/intended

correction Management’s assessment of- Impact on the plan financial statements Impact on the plan’s tax status

INTERNAL CONTROLS


Fiduciary obligations Effective controls

reduce the risk of asset loss help ensure that plan information is complete and accurate financial statements are reliable laws and regulations are complied with

Protections to plan Minimizes opportunities or unintentional errors or intentional

fraud Helps discover small errors before they become big problems

Why Internal Controls are Important to Your Plan


Internal control is a process General characteristics: Policies and procedures that provide for appropriate

segregation of duties to reduce the likelihood that deliberate fraud can occur

Personnel qualified to perform their assigned responsibilities Sound practices to be followed by personnel in performing

their duties and functions A system that ensures proper authorization and recordation

procedures for financial transactions

What is Internal Control?


Determine your plan’s control objectives over: Investments Contributions Benefits (distributions or other withdrawals) Participant data (eligibility, benefit accumulation, vesting) Participant loans Administrative expenses Record retention

Establish, document and communicate your internal controls

How to Establish Cost-Effective Controls


Internal control is only effective when properly designed and operating as intended—important to monitor over time

Activities should address: Are internal controls in place and operating? Is the system working as designed? Are exceptions and problems identified and resolved

promptly? Are the controls periodically reviewed?

Monitoring Your Controls is Critical


Communication in writing is required “significant deficiencies” “material weaknesses”

Examples Lack of segregation of duties Lack of internal expertise Insufficient monitoring of activities of third-party

administrators/custodians Material misstatements in accounting records

Auditor’s are Required to Communicate Internal Control Deficiencies


It starts with audit planning. Your plan auditor may review your benefit plan’s internal

controls and identify best practices and areas for improvement.

Specific Examples: Assist with financial statement preparation and footnote

disclosures Offer advice on technical issues Provide research materials Make recommendations

How Your Plan Auditor can Help You


Examples of Selected Internal Controls

Loans receivable from plan participants and related interest income are properly reported Loans are made only with proper authorization based on guidelines

established in the plan instrument in conformance with ERISA and tax requirements.

Entries to detailed loan records are reconciled with cash disbursements and receipts records.

Interest income is periodically calculated in accordance with rates established in the plan instrument and properly accrued.

Detailed records maintained by third-party administrator are reconciled with trustee’s/asset custodian’s reports.

Records are periodically reviewed for past-due amounts.


Access to cash receipts, cash receipts records, and contribution records is suitably controlled to prevent or detect within a timely period the interception of unrecorded cash receipts or the abstraction of recorded cash receipts. Cash is independently controlled upon receipt. Cash receipts are deposited intact daily. Checks are restrictively endorsed upon receipt.



Access to cash receipts, cash receipts records, and contribution records is suitably controlled to prevent or detect within a timely period the interception of unrecorded cash receipts or the abstraction of recorded cash receipts.(Cont.) Responsibility for receiving and processing contributions is

adequately segregated.

Bank accounts are reconciled monthly.

Past-due contributions are investigated on a timely basis.

Access to computerized contribution records is limited to those with a logical need for such access.



Contributions are recorded at the appropriate amount and in the appropriate period on a timely basis. Sponsor or employer payroll records are compared with

contribution calculations. In the case of multi-employer plans, some form of periodic payroll audit is performed.

Initial controls are established over contribution records for both employer and participant contributions (e.g., salary reduction amounts, after tax and rollovers).

Clerical accuracy of contribution forms is checked.

Subsidiary contribution records are reconciled to the trustee/asset custodian or third-party administrator reports.



Contributions are recorded at the appropriate amount and in the appropriate period on a timely basis. (Cont.) Contribution forms are reconciled to cash receipts ledger and bank

deposits.

Control totals for participant and employer contributions are maintained.

Contribution receipts are issued to participants containing notices requesting reviews of discrepancies.

Participant contributions are remitted to the trust within guidelines prescribed by Department of Labor regulation.


RESOURCES


Where to Get More Help


http://www.irs.gov/Retirement

Resources

http://www.irs.gov/Retirement


Resources


http://www.dol.gov/ebsa/compliance_assistance.html#section3

Resources

http://www.dol.gov/ebsa/compliance_assistance.html


Questions?


Join us for these courses: 10/9 & 10/21: ERISA Plan Internal Controls and Your Fiduciary

Responsibilities 12/9 & 12/17: Understanding Your Employee Benefit Plan’s

Investments

Read these related publications: Whitepaper: Plan Sponsor's Guide to Retirement Plan

Investments Employee Stock Ownership Plan Primer

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Webinar Slides: Common Errors in Qualified Plans

Economy & Finance

Transcript of Webinar Slides: Common Errors in Qualified Plans