Spring 2011 issue of Horizons

Compliance Notes The following compliance notes are general in nature but may apply to your plan. • Fiduciary or Retirement Committee Meetings - The Retirement or Investment Committee should meet periodically throughout the plan year and fulfill its fiduciary responsibilities. In addition, the Committee should review the investment policy statement periodically during the plan year and take appropriate action. • Eligible Employee - An employee must be provided with the relevant documentation once he/she is eligible to participate in the plan. The employee must satisfy the eligibility requirements contained in the plan document for each type of contribution. • Depositing Participant Contributions and Loan Repayments - Safe Harbor (Fewer Than 100 Participants) - A Department of Labor (DOL) regulation was finalized in January of 2010 that requires the plan sponsor of a plan with fewer than 100 participants as of the beginning of the plan year to timely deposit participant contributions (401(k) salary deferral, Roth 401(k) and after-tax) and loan repayments into a retirement plan’s trust. The money must be deposited within seven business days after it has been withheld from participant compensation. - Non Safe Harbor (100 or More Participants) - The DOL did not finalize the regulation for a plan with 100 or more participants but the current regulations require that money be deposited into the plan’s trust as of the earliest date it can be reasonably segregated from the employer’s general assets but no later than 15 business days after the end of the month in which the contributions were withheld by the employer from participants’ compensation. The Department of Labor indicated that the 15 business day period should not be used as a safe harbor. Failure to comply with the requirements can result in a prohibited transaction that must be reported on Form 5500. • Retirement Plan Audit - Generally a retirement plan that has 100 or more participants as of the beginning of the plan year must have an audit

performed by an independent public accountant. The audit report must be attached to the Form 5500 (Annual Return/Report of Employee Benefit Plan). A plan administrator should contact its accountant to schedule the audit if one is required. • Form 8955-SSA (Annual Registration Statement Identifying Participants with Deferred Vested Benefits) - Plan sponsors of qualified retirement plans were for the first time required to electronically file Form 5500 (Annual Return/Report of Employee Benefit Plan) for plan years beginning on or after January 1, 2009. Form 5500 Schedule SSA previously included information about terminated participants with vested deferred benefits. The information included the name, social security number, type and the amount of the benefit owed to the participant. However, the Form 5500s are now public information once they are filed with the Department of Labor. They did not want participant social security numbers to be posted on their website, so they did not require plan sponsors to report this information with their 2009 Form 5500. The government recently released a draft of Form 8955-SSA (Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits) for public commentary. After it is finalized, the IRS will announce a special due date for plan sponsors that had terminated participants with vested accrued benefits when they filed their 2009 Form 5500. Plan sponsors will be required to complete and file the new form but the participant information will not be made public. • Plan Error Correction - Plan administrators must ensure that their plan satisfies the statutory and regulatory requirements both in form and in operation. Generally, failure to keep a plan in compliance can result in adverse consequences to the employer, employees and trust. The IRS and Department of Labor have error correction programs to enable a plan sponsor or fiduciary to correct certain plan defects. An employer or plan administrator should seek professional assistance to remedy and correct any plan defect.

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