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6 Year-End Tips for Retirement Plan Sponsors

November 8, 2013 3 Min Read Employee Benefit Plans
Mark G. Metzler, CPA, CGMA, CEPA Director, Audit & Accounting

6 year end tips for retirement plan sponsorsPractically every company provides a retirement plan as an employee benefit, and it is often set up and then forgotten. As we approach the end of the calendar year, this is a good time to remind plan sponsors to check the following items:



  1. Check special deferral election of bonuses. Companies often provide bonuses toward the end of the year. Plan sponsors should check to see if their 401(k) plan allows for a special bonus election that would enable participants to defer up to 100 percent of bonuses without impacting their current deferral election, or waiting until the established timeframe when a change is permitted under the plan. This special election requires a plan amendment, so you may need to contact your third party administrator (TPA) or ERISA counsel for assistance.
  2. Accumulate information for compliance. Shortly after year-end, your TPA will contact you for census information (including name; dates of birth, hire, and termination; hours of service, and compensation) to conduct annual discrimination testing. It may be wise to get a start on accumulating this information in December.
  3. Review ERISA fidelity bond coverage and fiduciary liability insurance. All retirement plans are required to have an ERISA bond to protect plan assets from theft. However, plan sponsors also need to consider the possibility of litigation from aggrieved plan participants. Although fiduciary liability insurance is optional, it is a good idea because it offers plan fiduciaries protection in case of litigation. Fiduciaries, like plan trustees, may be personally liable otherwise.
  4. Consider changes to your plan provisions. We are seeing more and more plan sponsors adopting features like automatic enrollment, automatic escalation, and Roth provisions. These plan provisions often lead to increased participation by employees and can assist the plan in passing its discrimination testing.
  5. Review plan expenses. With new fee disclosure regulations in effect, plan sponsors have greater access to information about fees being charged to the plan. Plan sponsors should review this information and benchmark fees based upon similar-sized plans. It is not necessary to work with the lowest cost provider, but you should make sure the fees being charged to the plan are reasonable in light of the services being provided.
  6. Review your service providers. Make sure you are working with suitably experienced and qualified plan providers. Surround yourself with the right professionals (TPA, investment advisor, auditor, and ERISA counsel) to help you succeed. A plan sponsor should not compromise on hiring quality advisors.

Focus on these items prior to year-end to alleviate potential problems and start the New Year on the right foot.

Mark G. Metzler can be reached at Email or 215.441.4600.

Contact the Author

Mark G. Metzler, CPA, CGMA, CEPA

Mark G. Metzler, CPA, CGMA, CEPA

Director, Audit & Accounting

Employee Benefit Plans Specialist, Owner Operated Private Companies Specialist, Private Equity-Backed Companies Specialist

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