As the year comes to a close, it’s the perfect time to ensure that your organization’s processes are in order, particularly in areas critical to retirement plan compliance and administration. Below, we highlight several key areas that demand attention and share the importance of these areas.
The Value of Meeting Minutes
Meeting minutes serve as a vital record for your organization’s decisions and discussions, particularly for fiduciary meetings involving 401(k) or 403(b) plans. These records are essential for demonstrating compliance with plan oversight responsibilities. Minutes provide an official record of decisions related to investment lineups, administrative reviews, and plan amendments. Without thorough documentation, you may face challenges during audits or regulatory reviews.
To ensure accuracy, include:
- Meeting dates and participants.
- Topics discussed and decisions made.
- Follow-up actions or timelines.
Accurate meeting minutes also help in maintaining continuity during staff transitions and can serve as a reference point when addressing participant questions or disputes.
Reviewing SOC 1 Reports
SOC 1 reports are critical tools for evaluating the internal controls of service providers managing your retirement plans. These reports can identify risks that could impact participant data, contributions, or distributions.
When reviewing a SOC 1 report:
- Ensure it covers the reporting period applicable to your plan.
- Review the auditor’s opinion for qualifications or exceptions.
- Assess user controls required by the plan sponsor.
Understanding the findings and addressing any gaps is essential to safeguarding your plan’s compliance and operational integrity. If you’re unsure how to interpret a SOC 1 report, we’re here to guide you.
Timeliness of Contributions
Depositing participant contributions promptly is not just a best practice but a regulatory requirement. The DOL regulations require employee contributions to be remitted “to the plan as of the earliest date on which such contributions can be reasonably segregated from the employer’s general assets.” There is no “safe harbor” rule for plans with more than 100 participants. When examining a plan, the DOL reviews patterns of remittance history to determine the earliest date an employer can reasonably segregate and remit the employee contributions. Therefore, if the Plan was audited, it is possible that the DOL could consider the remittances that took longer to be “late”.
Failure to meet this standard can result in prohibited transactions, fines, and potential participant complaints. Use year-end as an opportunity to evaluate whether your processes meet timeliness requirements. If discrepancies are found, correcting them promptly can mitigate penalties and demonstrate good faith compliance.
Importance of Accurate Personnel Data
Maintaining up-to-date and accurate personnel data is a cornerstone of effective plan administration. Key data points such as Date of Birth (DOB), Date of Hire (DOH), and Date of Termination (DOT) are crucial for eligibility determination, vesting calculations, and compliance testing.
Errors in personnel data can lead to:
- Incorrect allocations.
- Miscalculated benefits.
- Failed compliance tests, which could result in costly corrections.
Take the time now to review personnel data and address any inconsistencies. This not only improves your compliance position but also ensures participants receive accurate information about their benefits.
New to the Audit Threshold? We’re Here to Help
If your plan has exceeded the 100-participant threshold this year, you may be subject to an independent audit for the first time. This can be a daunting process, but preparation is key. By addressing these areas now, you’ll not only ensure a smooth year-end but also set a strong foundation for the year ahead.
If you have questions or need assistance, don’t hesitate to reach out to our team. Together, we can help safeguard your plan’s compliance, protect participant benefits, and reduce administrative burdens.