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Are You Prepared for an IRS Audit?

The Internal Revenue Service’s (IRS’s) Employee Benefit Audit Program is used to audit and enforce. The IRS’s emphasis, with respect to defined contribution plans is on compliance with the requirements of the Internal Revenue Code (the Code), the plan’s tax qualification and administration of all plan documents. In the event of noncompliance with regulations, the IRS can impose taxes, penalties and interest. Most IRS audits are selected at random, but certain audit triggers exist that plan sponsors should be…

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Hey Joel! Answers From a Former Practicing ERISA Attorney, Fiduciary Review

Do you have a question for an ERISA attorney burning in your heart? This forum features answers to some of the most common plan sponsor questions from all over the country, written by a former practicing ERISA attorney. Should I distribute the Fiduciary Investment Review to plan participants? – Generous in Georgia Dear Generous in Georgia, I appreciate your desire to provide detailed information to your plan participants, but hold your horses. While there is nothing legally preventing the…

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Have You Conducted a Fee Equalization/Levelization?

Fees in defined contribution (DC) plans can be complicated. Historically, fees have not been fully and simply disclosed, but the industry is changing towards greater and more understandable disclosure. Simply put, there are two basic types of fees: administrative and investment-related. The investment-related fees are deducted from earnings on participant accounts and will vary from one investment to the next. These fees are paid to the firms that are making decisions about how the various funds are invested in…

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Is it Time for a Plan Refresh?

The duty to provide participants with sufficient information to make consistently informed retirement investment decisions is a basic fiduciary responsibility under ERISA Section 404(a). However, there could be some plan committees who feel their participants are not consistently making prudent decisions. According to a recent JP Morgan survey1 nearly 75 percent of participants say they are not confident with selecting investments. It is no surprise they found that 80 percent of participants surveyed have portfolios that do not match…

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What Happens When You Deposit Employee Deferrals Late?

Judges Gavel

In our research, late deposit of contributions is a frequent error made by plan sponsors and is a key priority of the Department of Labor (DOL). In every plan audit conducted by the DOL, the investigator looks to see if contributions have been deposited in a timely manner. A number of years ago, the DOL revised the instructions to Form 5500 requiring plan auditors to review and confirm that contributions are made in a timely manner. For this reason,…

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IRS Retirement Plan Announcements for the Recent Hurricanes and California Wildfires

Many individuals have recently been significantly impacted by both the hurricanes and California wildfires and the Internal Revenue Service (IRS) provided relief for qualified individuals in retirement plans through several announcements. In addition, President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (“Act”), which provides tax relief for individuals affected by Hurricanes Harvey, Irma and Maria (“HIM”). Below is a summary of the recent communications, including new information based on a recent IRS…

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Weather or Not, Stay Invested

2017 was one of the strongest years on record for hurricanes in the Atlantic region of the United States and among the costliest of seasons on record, with preliminary estimates totaling over $200 billion. This is the second largest season in damages since 1900, with 2005 having a slightly higher total (Hurricane Katrina).¹ For those not directly affected by the hurricanes or other extreme weather events, some often wonder how it might affect them indirectly, via their investments. Article…

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Are Your Participants Experiencing a Fee Imbalance?

Subsequent to the 2012 implementation of ERISA fee reporting regulations (ERISA 408(b)(2) & 404(a)(5)), the Department of Labor (DOL) began to consider the appropriateness of the allocation of plan fees among participants in order to address fee imbalance. This is a subject that generally had not been on the radar screen of many plan fiduciaries, but once identified, tends to generate considerable traction due to its obvious validity. Ironically, advisors’ diligent attention to obtaining the lowest accessible share class…

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HSA: A Tax Trifecta Investment Opportunity

When it comes to fiscally frugal health insurance options, health savings accounts (HSA) aren’t exactly new to the game. They’ve been around since 2003 and have only increased in popularity among employers, politicians and certain types of employees. In recent years, however, the growth in popularity of HSAs is due less to the accounts’ function from a cost-saving benefit plan and more to its utility as a wise choice for investment opportunities. It’s time to look beyond the traditional…

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Improving Automatic Enrollment

Our research shows that the vast majority of plan sponsors recognize that automatic enrollment has been effective in improving plan success and simplifying internal plan administration. Could automatic enrollment’s success be improved upon? When automatic enrollment first began gaining popularity, about 20 years ago, its typical design served a number of purposes. It improved plan enrollment and made for more efficient administration (no more “herding the cats” every year during open enrollment periods). For the majority of plans it…

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