In this fifth and final article in our review of the benefits landscape, we outline 8 things to consider beyond health care provisions.
1. Review Plan Documents
Recently the IRS and Social Security Administration announced cost-of-living adjustments to the dollar limits that apply to various employer-sponsored retirement and welfare plans and the Social Security wage base for 2015. As a result, it’s important to review all plan documents to ensure they are all up to date with the latest amendments and changes in the administrative practice. You should make sure you align the information in your summary plan description with plan documents by incorporating the changes reflecting the amendments into summaries of material modifications.
2. Re-Examine Internal Control Structures
It’s important for retirement plan fiduciaries to make sure they are aware of the internal controls related to their benefit plans. Plan sponsors, trustees, or administrators are all regarded as fiduciaries under the ERISA, which entitles the individual to have certain responsibilities. The best way to make sure you are meeting these responsibilities is to implement effective internal controls over the financial reporting process.
3. Used Forfeiture Balances Annually
Plans including provisions for allowing the accumulations of forfeitures through the year should adhere to the plan document’s provision for forfeiture. Each year, all of the forfeitures should be reallocated to the participants or used in adherence with the plan document. If not, the plan could have an operational failure that requires correction.
4. Employee Deferral Contributions
Legislation requires that all employee deferral contributions be remitted to the custodian or trustee as soon as they can be segregated from the assets of the employer. However, these remissions must not be any later than the 15th business day of the month after the following payroll date.
5. Review Administrative Fees
One aspect of the responsibilities of a fiduciary is to make sure the fees being paid under the plan are reasonable. As a result, it’s vital to ensure you perform a review and document the process each year. It’s also necessary to remember the plan’s fee schedule is sent to all participants each year.
6. Find Lost Participants
Each year, fiduciaries must make a reasonable effort for finding any lost participants to send fee notices or to distribute funds. At a very minimum, this practice should include checking employer records, certified mail, working through the free search tools on the web, and even checking with the beneficiary designation.
7. Small Balance Distribution
Often, plans have provisions designed to disburse smaller account balances as soon as the employee is terminated. At the very least, this practice should be done on a yearly basis. When it is done, you will reduce the number of plan participants, which could translate into a significant amount of savings.
8. Tracking Minimum Distributions
As a fiduciary, the minimum distributions must be tracked and executed. It’s an excellent practice to review the administrative procedures and agreements each year to ensure you are using the best practices. When you fail to execute the minimum distribution, it can result in significant penalties for the owner of the account, including a staggering 50% excise tax.
Stacy Barrow advises UBF clients on various topics around ERISA and the ACA. One of the nation’s leading experts on the Affordable Care Act, Stacy uses a practical, business-focused approach to counsel his clients on all matters related to employee benefit plans. Stacy also has extensive technical knowledge and experience designing and implementing health and welfare plans that meet the numerous and intricate requirements of applicable federal and state law.