Benefit administrators work hard to avoid the unexpected costs and frustration associated with an IRS audit. One way to do so is to perform a periodic check-up of your organization’s benefit plans, associated documentation, and procedures. This should be performed with the help of benefits legal counsel to take into account the laws and regulations that could impact your business, employees, and dependents.
Update Plan Documents
Depending on the type of benefit plans your organization sponsors, there may have been legislation and regulatory changes in the past year that impact, your plans, you as plan administrator, and the plan participants. The first step is to update plan documents to reflect changes before you take steps to update internal processes and notify participants. For example, 401(k) plans must be amended in a timely fashion, and any amendments must be completed by the last day of the plan year that includes the effective date of the amendment.
Update Plan Processes
Any time a change is made to a plan document, you need to make sure that internal processes are in line with this change. This includes updating summary documents and notices to reflect new plan details or language. This also includes changing when and how you notify plan participants of relevant details. Plans must operate in accordance with the plan documents to be in compliance with ERISA, and the more thorough documentation you can provide of you and your team following the documented processes, the better and easier you will be able to show if that you are in compliance when asked.
Matching Contributions
For retirement plans, ensure that all owed matching contributions have been provided to eligible participants. Make sure that all employees are aware of relevant plan provisions, including eligibility for contributions and how the business calculates their match.
Deferral Elections
Complete payroll records, employment records, and tax forms are required to ensure employees eligible to make deferral elections are notified in a timely manner. There is a limit on an individual’s elective deferrals. For 2019, the general limit was $19,000, but participants 50 and older could defer an additional $6,000 (for a total of $25,000). Make sure you have a plan in place to detect excess deferrals and correct them before the employee faces unexpected tax consequences. Finally, make sure you deposit deferrals in a timely fashion, as required by the Department of Labor, to avoid penalties for breach of fiduciary duty.
The ERISA attorneys at Hall Benefits Law work with clients to perform first-of-year benefit plan checks. They help make sure plans are up to date with current and forthcoming law and that procedures are being completed and required notifications sent out in a timely fashion. To learn more or to get help making changes to your plans today, call 678-439-6236, or visit the Hall Benefits Law website.
Hall Benefits Law, LLC
