As we enter into tax season, we just wanted to provide a little explanation of what needs to be done for your retirement plan every year to meet IRS and Department of Labor requirements and why we need to ask… Lots of Questions!

You put your Retirement Plan in place to take advantage of the tax breaks that a Qualified Plan has to offer which provides benefit to yourself as well as to your employees’ futures.  However, your responsibilities don’t stop once the plan is put into place.  The Plan Sponsor plays a huge role in running the Plan.  You are responsible to provide good data and ensure the integrity of the data provided.  The results of the testing we do is only as good as the information that we are provided.

Our questions might appear annoying but they are vital in helping us identify major compliance concerns.  To keep your plan qualified, we make sure your Plan is not operating in a discriminatory manner.

We won’t ask you to determine who your Highly Compensated Employees are. WE FIGURE THAT OUT FOR YOU.

We won’t ask you to determine who your Key Employees are. WE FIGURE THAT OUT FOR YOU.

Determining these groups by definition are critical to the compliance testing for the Plan.  Getting them wrong can be bad news.  That’s why we ask the questions on:

  • your full ownership structure
  • who your Family members are
  • detail on everyone’s compensation, dates of hire, birth, termination and rehire

We also ask questions about any other companies owned by the owners to help identify any controlled group and affiliated service group situations. Any ownership or business entity changes, from year to year, can have a huge impact on the Plan Design and testing consequences. We don’t want to inadvertently exclude a group of employees that should have been included in the Plan. For that reason, don’t forget to let us know of any upcoming changes in your company (ownership, acquisitions, etc.). We want to make sure these changes will not affect your Plan.

If we don’t ask, we don’t know. If we find out later, then we are in the situation where we need to correct a Plan to bring it back into compliance for each and every year that the error affects. This can get very costly. Corrective contributions, excise taxes, penalties and filing fees can all apply, as well as our fee for our time to work out the correction. If the Department of Labor finds the error first under an audit, the cost is even higher to fix.

Once we obtain all the information that we need, we take it from there. Leave the rest to us. We’ll do the work so you won’t have to.