Keeping in Compliance: IRS Tips for Plan Sponsors

As an employer, you’re responsible for keeping your company’s retirement plan in compliance at all times.

Additionally, your plan document should be reviewed on an annual basis and administered accordingly. The IRS offers useful tips for plan sponsors, helping you to stay compliant, informed, and prepared in order to provide the best possible retirement plan for your employees – here are some highlights.

It’s Crucial to Understand and Verify Your Adoption Agreement Options

For pre-approved plans, you may have an adoption agreement that supplements the basic plan document and lists features that may be selected. Understanding this document is critical, and you should very specifically understand and comprehend what it says about plan eligibility, types and limits of contributions, how contributions are divided among plan participants, as well as vesting and paying benefits.

Learn Everything You Can About Your Service Agreement

As a plan sponsor, it’s important to understand what your service agreement does and does not cover. For administrative tasks, it’s imperative to know who will perform these, and to make sure that person has the information they need in order to perform the following:

  • Administer the terms for enrollment, contributions, and distribution of funds
  • Deliver mandatory plan notices to participants
  • Determine any required compliance testing and carry it out in a timely manner
  • Perform all required recordkeeping properly
  • Review the plan document for any legal changes and make updates as needed
  • Make all required filings to the IRS and Department of Labor

Communicate with Your Pre-Approved Plan Provider

Notify your provider if you make any changes with respect to your business, employees, or compensation – or if you need to make changes to your plan’s terms. In addition, it’s important that you:

  • Understand all fees that will be charged by the plan provider
  • Retain the IRS issued opinion or advisory letter for your pre-approved plan
  • Promptly sign any plan amendments from your plan provider

Maintain Open Communication with Your Plan Service Provider

Advise your provider about any changes in employee status, new hires, terminations, and compensation as well as:

  • Accurate census data for determining plan eligibility and benefit payments
  • Terms for defining employee contributions, payments, and loans
  • Any amendments to the plan (e.g., loan or hardship provisions, contributions or allocation formulas)

Stay on Top of Your Plan Maintenance Requirements

Review all reports, including the allocation report for potential contribution errors and the distribution report to verify that participants have started their minimum required distributions and consented to these payments. Monitor that all loans are made in accordance with the terms of the plan, and that payments are made in a timely fashion. Document your actions with respect to defaulted loans and retain all documentation for hardship withdrawals. The IRS also recommends an independent review of your plan.

View the full IRS document at the link here ( – or for further questions relating to your specific plan, consult your plan advisor.

Securities and investment advisory services are offered solely through registered representatives and investment advisor representatives of Ameritas Investment Corp. (AIC), a registered Broker/Dealer, Member FINRA/SIPC and a registered investment advisor. AIC is not affiliated with Summit group of Virginia LLP. Additional products and services may be available through Summit Group of Virginia LLP that are not offered through AIC. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

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