Category: Retirement Plan Sponsors

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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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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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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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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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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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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