n most cases errors in the administration of a retirement plan result from the ERISA administrator’s lack of understanding of the provisions in the plan document. A clear example would be the definition of compensation. Does it exclude some part of compensation, e.g. bonuses, is it based on the plan year or calendar year? Understanding eligibility requirements as they relate to entry dates in another potential for an operational error when an employee enters the plan too early or too late. To avoid errors of this type, the plan should have a written administrative policy that identifies who is responsible for the various functions required to manage the plan. Will the plan sponsor or the payroll vendor be responsible for monitoring timely deposits of employee deferrals? Does the plan document indicate when and how often an employee can make changes to their deferral election?
For more information important for accountants related to qualified accounts, please email AskAPS@apspension.com or sign up to receive our newest posts.