The Internal Revenue Service (IRS) has released an updated and enhanced 401(k) Fix It Guide for employers. The guide was updated by the IRS in June 2014 and can be found at the 401(k) Plan Fix-It Guide on IRS.gov.
Retirement plan mistakes can easily happen, but they are often costly. The IRS Fix It Guides will show you how to correct plan mistakes in the most cost effective manner. If you believe you have a Retirement Plan mistake on your hands, contact a Leading Retirement Solutions team member, today at office@leadingretirement.com or (800) 974-2814.
Why the IRS Fix-It Guides Are Worth Using
Leading Retirement Solutions loves the 401(k) Plan Fix It Guides prepared by the Internal Revenue Service. The IRS Fix It Guides are designed to communicate in the most common terms, certain correction programs that are available to employers when they don’t operate their 401(k) Plan pursuant to regulations. The 401(k) Fix It Guide details how to find plan mistakes, how to fix plan mistakes and how to avoid plan mistakes in the future.
12 Common 401(k) Plan Mistakes the Guide Covers
The updated and enhanced 401(k) Fix It Guide provides helpful information for the following Retirement Plan mistakes that commonly occur when operating, managing and maintaining a 401(k) Plan:
- Your plan’s legal documents have not been updated in a few years
- Failure to run the plan in accordance with the terms of the plan document
- Failure to use the plan definition of compensation correctly for all deferrals and allocation
- Employer contributions weren’t made to all appropriate employees
- The plan failed the 401(k) ADP and ACP nondiscrimination tests
- Eligible employees weren’t given the opportunity to make an elective deferral
- Failure to adhere to the 402(g) contribution limits
- Failure to deposit employee contributions on a timely basis
- Failure to make or administer plan loans in accordance with legal requirements or the plan document
- Hardship distributions weren’t made properly
- Required minimum contributions weren’t made to a top-heavy plan
- Haven’t filed a Form 5500, timely
Where one of these has already happened, our consulting and correction services cover the formal routes available, and ongoing plan administration is how most of them are avoided in the first place.
Helpful Resources
- IRS, 401(k) Plan Fix-It Guide — the current web version, covering how to find, fix and avoid each mistake.
- IRS, Fix-It Guides for all plan types — the equivalent guides for 403(b), SARSEP, SEP and SIMPLE IRA plans.
- IRS, Avoid plan errors — checklists and internal controls for keeping a plan compliant.
- IRS, Voluntary Correction Program — correcting an operational failure with IRS approval before an audit.
- Department of Labor, Delinquent Filer Voluntary Compliance Program — the route for a late or missing Form 5500.
Operating a plan correctly is one obligation. Having a plan at all is becoming another: a growing number of states now require employers above a certain size to offer a qualifying retirement plan or enroll their employees in a state-facilitated program.
- Which states have mandatory retirement plans — who is affected and what triggers the requirement.
- State retirement mandate map — the current position and deadline for every state.
