Be prepared for an audit of your business retirement plan

As you prepare your tax returns, it’s easy to see why a retirement plan is one of the best tax deductions you can get. Contributions to a qualified plan can potentially get you a big tax break — as big as $53,000 with a defined contribution plan or even $100,000 or more with a pension plan.

If you’re an employer who sponsors a retirement plan, you don’t want to jeopardize the qualified status of your plan. Today, we are witnessing greater regulatory scrutiny of business retirement plans. Use this checklist to help you avoid some common deficiencies cited by the IRS and/or DOL in their most recent audits. If you need assistance or think you may need to make corrective measures, please contact your third party administrator (TPA) or your financial professional immediately.

Plan Disclosures and Documents

Do you maintain electronic copies of all your plan documents including your 5500 filings?

Best practice: Make sure to scan and electronically save every document you receive from your TPA. This will make responding to an auditor’s request list much easier. Of course, your TPA and/or adviser will be able to assist you, but do make sure you’ve signed and properly dated all your documents.

If you have a safe harbor 401(k), do you forward the safe harbor disclosure to your employees every year?

Best practice:  Forward the disclosure to all employees regardless of eligibility and do so electronically.

Do you provide your employees with a copy of the plan’s SPD (summary plan description)?

Best practice: Forward the SPD to all employees when they are first hired regardless of eligibility and do so electronically.

Do you forward plan benefit statements to your participants every year?

Best practice: Forward each participant’s benefit statements electronically as soon as you receive them from your TPA.

Plan Contributions

Do you deposit your employees’ salary deferral contributions within 7 days after they are deducted from payroll?

Best practice: Late salary deferral deposits are one of the most common DOL deficiencies. They are also the easiest to avoid. Deposit deferrals at the same time payroll is paid and never place them in your company’s general assets.

Do you reconcile your bank statements to ensure that all plan contributions (including loan payments) have cleared your bank?

Best practice: Reconcile your bank statement regularly to ensure that the contributions were received by your financial institution.

Do you budget for mandatory safe harbor and employer contributions to ensure you’ll be able to deposit them on time?

Best practice: Employer contributions are due no later than the business tax return filing date. In addition, some employer contributions are mandatory so make sure to budget for these contributions throughout the year.

Company and Employee Census Information

Was your annual employee census information completed accurately and submitted to your TPA?

Best practice: Employers should be diligent about completing their employee census forms accurately. Review how your workers are paid (are they really 1099 contractors or should they be W-2 employees?). Make sure to identify any family connections and immediately alert your TPA to any other businesses you may own. Keep in mind that the TPA uses the employee census data to calculate contributions and distributions, and to conduct various IRS tests. It is one of the first documents an auditor will request.

Do you keep accurate payroll records and backup what you say on your census?

Best practice: Make sure you can prove what you state on your employee census. Maintain payroll records, and time sheets (if you pay your employees hourly). It’s also a good idea to maintain all your employee salary deferral agreements.

Have you alerted your TPA to any changes to your business such as a change of ownership, tax filing status, financial stress, etc.?

Best practice: Any material changes to your business (including your financial situation) should be communicated to your TPA. Keep in mind that your salary may impact how much retirement savings you can do (in a DC plan). Therefore, you’ll want to review any electronic funds transfers you’ve established to make sure you don’t over-contribute to your plan.

ERISA Fidelity Bond

Do you have an ERISA Fidelity Bond?

Best practice: Each person who handles funds for a qualified retirement plan is required to be bonded. This generally includes employers who sponsor a plan and their investment advisers. This is a specific type of bond so do not confuse it with other professional bonds.

Have you renewed your bond?

Best practice: You should save and maintain a recent copy of your plan’s ERISA Bond certificate. It is one of the first items a regulator will request.

Did you increase your bond value when your plan increased its assets?

Best practice: Your plan must be bonded for an amount equal to at least 10% of plan assets or a minimum of $1,000 unless covered under an exemption under ERISA. A common practice is to have your agent include an automatic rider thus increasing the bond as plan assets increase or you must regularly check that your bond is enough for your plan assets.

Related Posts

61 Comments

  1. Generally I do not read article on blogs, but I wish to say that this write-up very forced me to try and do it! Your writing style has been surprised me. Thanks, very nice article.

    https://imobiliariahoje.com.br/quem-somos

  2. I keep listening to the newscast speak about receiving free online grant applications so I have been looking around for the most excellent site to get one. Could you advise me please, where could i find some?

    https://digitaltendances.com/telechargement/mp3-gratuit-meilleurs-sites-ecouter-telecharger-musique/

  3. Hi, I think your site might be having browser compatibility issues. When I look at your website in Safari, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, fantastic blog!

    https://www.likeourown.com.au

  4. Thank you for the sensible critique. Me and my neighbor were just preparing to do some research on this. We got a grab a book from our local library but I think I learned more from this post. I’m very glad to see such excellent information being shared freely out there.

    https://aceitespara.com

  5. It’s a pity you don’t have a donate button! I’d certainly donate to this superb blog! I guess for now i’ll settle for book-marking and adding your RSS feed to my Google account. I look forward to new updates and will talk about this site with my Facebook group. Chat soon!

    https://www.ezyspot.com/

  6. Hi , I do believe this is an excellent blog. I stumbled upon it on Yahoo , i will come back once again. Money and freedom is the best way to change, may you be rich and help other people.

    http://aduslots.com

  7. After all, what a great site and informative posts, I will upload inbound link – bookmark this web site? Regards, Reader.

    http://aduslots.live

  8. I conceive this site has some rattling superb information for everyone :D. “Do not go where the path may lead, go instead where there is no path and leave a trail.” by Ralph Waldo Emerson.

    http://winjudi.biz

  9. I truly appreciate this post. I’ve been looking all over for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again

    http://winjudi.info

  10. I truly wanted to write down a simple word in order to express gratitude to you for all of the fantastic tips and hints you are showing here. My prolonged internet search has now been paid with sensible ideas to go over with my guests. I ‘d suppose that we site visitors actually are quite endowed to live in a fine network with so many wonderful people with useful plans. I feel somewhat privileged to have used your entire web page and look forward to many more enjoyable times reading here. Thank you once more for all the details.

    http://aduslots.com

  11. Wow, incredible blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your web site is great, let alone the content!

    http://aduslots.biz

  12. This is a very good tips especially to those new to blogosphere, brief and accurate information… Thanks for sharing this one. A must read article.

    http://aduslots.org

  13. Wow that was strange. I just wrote an incredibly long comment but after I clicked submit my comment didn’t appear. Grrrr… well I’m not writing all that over again. Regardless, just wanted to say wonderful blog!

    http://aduslots.mobi

  14. Hi, i believe that i noticed you visited my website thus i came to “return the want”.I am attempting to to find things to enhance my site!I assume its good enough to make use of some of your ideas!!

    http://aduslots.live

  15. Hi! This is kind of off topic but I need some guidance from an established blog. Is it very hard to set up your own blog? I’m not very techincal but I can figure things out pretty fast. I’m thinking about setting up my own but I’m not sure where to start. Do you have any tips or suggestions? Cheers

    http://aduslots.ltd

  16. Hello.This post was extremely fascinating, especially because I was looking for thoughts on this matter last Friday.

    http://adujoker.co

  17. Pretty! This was a really wonderful post. Thank you for your provided information.

    http://adujoker123.com

  18. Hmm it looks like your site ate my first comment (it was super long) so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to everything. Do you have any recommendations for newbie blog writers? I’d really appreciate it.

    https://www.webfullhost.com.br/

  19. you’re really a good webmaster. The website loading speed is incredible. It seems that you’re doing any unique trick. Furthermore, The contents are masterpiece. you’ve done a magnificent job on this topic!

    https://remedio.blog.br

  20. I was just searching for this information for some time. After 6 hours of continuous Googleing, at last I got it in your website. I wonder what’s the lack of Google strategy that do not rank this type of informative web sites in top of the list. Generally the top sites are full of garbage.

    https://www.youtube.com/watch?v=IKPFLqmAsTA

  21. Some really superb articles on this site, thanks for contribution. “There is one universal gesture that has one universal message–a smile” by Valerie Sokolosky.

    https://www.camphalfbloodrpg.com/

  22. You have brought up a very excellent details, thanks for the post.

    https://www.snntv.com/story/42096827/kevin-david

  23. I’m still learning from you, as I’m trying to achieve my goals. I certainly love reading everything that is posted on your website.Keep the tips coming. I liked it!

    http://idnpokergroup.site

  24. Howdy would you mind letting me know which hosting company you’re utilizing? I’ve loaded your blog in 3 different internet browsers and I must say this blog loads a lot faster then most. Can you recommend a good web hosting provider at a fair price? Thanks a lot, I appreciate it!

    http://winjudi.com

  25. Hi! I’m at work surfing around your blog from my new apple iphone! Just wanted to say I love reading your blog and look forward to all your posts! Keep up the superb work!

    http://winjudi.net

  26. Nice blog here! Also your website loads up fast! What web host are you using? Can I get your affiliate link to your host? I wish my web site loaded up as fast as yours lol

    http://winjudi.live

  27. I appreciate, cause I found just what I was looking for. You have ended my 4 day long hunt! God Bless you man. Have a great day. Bye

    http://starjudi.net

  28. Your place is valueble for me. Thanks!…

    http://starjudi.org

  29. F*ckin¦ tremendous things here. I¦m very satisfied to see your article. Thanks a lot and i am looking forward to touch you. Will you please drop me a mail?

    http://starjudi.info

  30. I gotta favorite this website it seems very beneficial invaluable

    https://prevenfirebrasil.com.br/

  31. hi!,I like your writing very so much! percentage we be in contact more about your post on AOL? I need a specialist on this area to solve my problem. May be that is you! Having a look ahead to peer you.

    https://premiere.tours/es/paseos-diarios-desde-lisboa/tour-religioso-por-fatima-y-santiago-de-compostela-12h/

  32. hello!,I like your writing so much! share we communicate more about your post on AOL? I require a specialist on this area to solve my problem. May be that’s you! Looking forward to see you.

    https://nemoslot.com

  33. I loved as much as you will receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get got an impatience over that you wish be delivering the following. unwell unquestionably come further formerly again as exactly the same nearly a lot often inside case you shield this hike.

    https://www.powerallpharmacy.ca/index.php?main_page=index&cPath=5

  34. Looking forward to reading more. Great post.Really thank you!

    http://www.gracedentalclinic.in

  35. Nearly all of what you mention is supprisingly legitimate and that makes me wonder the reason why I had not looked at this in this light before. This particular article truly did turn the light on for me as far as this particular issue goes. Nonetheless there is one factor I am not necessarily too comfortable with so whilst I attempt to reconcile that with the core idea of the issue, let me see what the rest of the readers have to say.Nicely done.

    https://tacticalinvestor.com/should-you-fear-stock-market-crashes/

  36. I haven’t checked in here for a while because I thought it was getting boring, but the last several posts are good quality so I guess I will add you back to my daily bloglist. You deserve it my friend 🙂

    https://industrywatchnews.com/

  37. Awesome blog.Much thanks again. Will read on…

    https://www.youtube.com/watch?v=i-VByxcRH1c

  38. You are my breathing in, I own few blogs and infrequently run out from brand :). “The soul that is within me no man can degrade.” by Frederick Douglas.

    http://tikasibz.simplesite.com

  39. Thank you for sharing excellent informations. Your web-site is so cool. I’m impressed by the details that you’ve on this blog. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for extra articles. You, my pal, ROCK! I found simply the information I already searched everywhere and just could not come across. What an ideal site.

    https://industrywatchnews.com/

  40. Really informative article post.Thanks Again. Really Cool.

    https://www.facebook.com/Adam-and-Eve-Coupon-Codes-111760873833095/

  41. I loved your blog.Thanks Again. Much obliged.

    https://www.facebook.com/Adam-and-Eve-Coupon-Codes-111760873833095/

  42. so much excellent information on here, : D.

    https://www.helloweb.co.nz/

  43. I really like and appreciate your post. Great.

    https://www.youtube.com/watch?v=JCccH5zqBxQ

  44. I think this is a real great article. Want more.

    https://www.olivier.aufrant.fr/index.php/2007/05/05/18-kawagoe

  45. Say, you got a nice blog post.Really thank you! Awesome.

    http://www.lasoracesira.it/component/k2/itemlist/user/1357828

  46. Really appreciate you sharing this blog article.Really looking forward to read more. Fantastic.

    http://bpo-services-langford.blogspot.com/2013/02/why-hire-magento-developer-choose-for.html

  47. Thank you ever so for you blog post. Will read on…

    http://www.3939.com.tw/userinfo.php?uid=63478

  48. Thanks for sharing, this is a fantastic blog post.Thanks Again. Want more.

    http://javscreens.com/m/mide-796.html

  49. Very informative article post.Really looking forward to read more. Really Cool.

    https://siamslot168.com/e0b8aae0b8a5e0b987e0b8ade0b895xo/

  50. I just couldn’t depart your site before suggesting that I extremely loved the standard information an individual supply on your guests? Is going to be back incessantly in order to check up on new posts

    https://www.youtube.com/channel/UCxtXBLhmjlVM-JHliVYJ9SA

  51. I am glad to be a visitant of this consummate blog! , thanks for this rare information! .

    https://rermedapps.com/oculomotor-nerve-palsy-medicine-osce-guide

  52. Say, you got a nice article post.Really thank you! Will read on…

    https://trump2020tshirt.com/

  53. Hello, you used to write excellent, but the last several posts have been kinda boring?K I miss your tremendous writings. Past few posts are just a little out of track! come on!

    https://rvbatterydelivery.com.my/kedai-bateri-masai/

  54. This is one awesome article.Thanks Again. Cool.

    https://037hdd.co/

  55. Fantastic blog post. Will read on…

    https://doomoviehdd.com/

  56. It’s exhausting to search out educated people on this topic, but you sound like you recognize what you’re talking about! Thanks

    https://www.waterpumpmalaysia.com.my/best-water-pressure-booster-pump

  57. This is one awesome article post.Thanks Again. Really Great.

    https://doonungs.com/

  58. A big thank you for your blog post.Really looking forward to read more. Awesome.

    https://www.hmprevent.com

  59. I really liked your blog post.Thanks Again. Much obliged.

    https://movi2free.com/

  60. Everything is very open and very clear explanation of issues. was truly information. Your website is very useful. Thanks for sharing.

    https://jadetana.com/

  61. I was just searching for this information for a while. After 6 hours of continuous Googleing, finally I got it in your website. I wonder what is the lack of Google strategy that don’t rank this type of informative websites in top of the list. Usually the top sites are full of garbage.

    https://betslotxo.com

Leave A Reply