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December 28, 2015

13 Common 401(k) Compliance Errors

As the administrator of a retirement plan, you are likely already aware of the 13 most common compliance errors as stated by the IRS. Some of the most common errors are the failure to;

  1. Follow the plan document terms in operation.
  2. Handle all deferral allocations and deferral elections in a plan, using the same definition of “compensation”.
  3. Make routine deposits of employee elective deferral amounts on a timely basis.
  4. Under Section 402(g) limit amounts for a calendar year. Also a failure to make all required distributions of any deferrals that exceed the limits, back to any affected plan participants.
  5. Update the 401k, required plan documents with the mandatory laws that govern the 401k plans.
  6. Make matching contributions to all appropriate employees by an employer.
  7. When a plan is “top heavy”, make mandatory minimum employer contributions to the plan.
  8. Properly manage any financial hardship distributions, including the cessation of deferrals as required for the balance of the plan year
  9. Distribute the annual Summary Plan Description to plan participants or to file the required annual Form 5500 return.
  10. Make a deferral election that results in a lost deferral opportunity that includes “all” eligible employees in the plan.
  11. Apply non-discrimination test results of the 401k ADP and ACP to the HCU contributions, which results in excess HCE contributions in the plan.
  12. Under Section 402(g) limit amounts for a calendar year. Also a failure to make all required distributions of any deferrals that exceed the limits, back to any affected plan participants.
  13. Conformation of both the requirements of the document and Section 72(p) in operation for participant loans.

It can be a very complicated process when you are the administrator of an employee plan. Don’t fall subject to fines and fees for your plan for not being in compliance. Having a professional to assist you will prevent these common errors and save your plan from hefty fines. 

As the plan sponsor, when it’s time to audit your plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Anders we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. 

We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. To get started, request a free 401(k) audit consultation below or contact the team at (314)-886-7913 to schedule an appointment.

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