As the end of the year approaches, it’s a good time to review your employee benefit plan to ensure it’s compliant and up to date. Following are the “top 10” items to consider:
- Does your plan require an audit? Generally, most existing benefit plans require an audit once the number of eligible employees exceeds 120 as of the first day of the plan year. Review the “80-120” rules in the Internal Revenue Service (“IRS”) Form 5500 instructions.
- Verify that your plan is properly making automatic cash-outs for participants that are no longer active and are within the threshold set by the plan document.
- Does your plan have a balance in the forfeiture account? The IRS requires that such funds be used on an annual basis and not be permitted to accumulate. Refer to your plan document regarding how the forfeitures are to be used and be sure the process is followed.
- 2018 will bring some changes to the contribution and compensation limits for benefit plans. Verify that the limits are taken into consideration as of January 1, 2018. For 2017, consider whether the maximum contributions have been made by the sponsor, or if there are additional contributions that could be made for 2017.
- Review the plan’s participant deferral remittance procedures and verify that the funds are being transferred as soon as administratively feasible, or if improvements in timeliness need to be made.
- Due to recent plan document updates, verify that the definition of compensation per the revised plan document matches what is currently being used to calculate contributions.
- Is it time to consider auto enrollment? If already utilizing auto enrollment, consider increasing deferral rates or adding an annual auto-escalation of deferral rates.
- Part of a plan administrator’s fiduciary duty is the continual monitoring of the investments offered by the plan. Schedule the review of the plan’s investments with your independent investment advisor and confirm that the plan is in compliance with the investment policy statement.
- For defined benefit plans, there has been a change in the mortality tables as of October 2017. Review the impact of the change in the tables with the plan actuary.
- If your plan document is other than a prototype plan document, verify that the plan has been updated to conform with current IRS regulations.
If you have questions about – or need assistance with – any of the above, contact your CSH Employee Benefit Plan advisor.
