Leadership Exchange - August/September 2011 - (Page 34)

FINANCE ECNANIF PREPARING FOR A 401(K) AUDIT Mark Shore mshore@atlasconsultingllc.com 732-770-2801 returns audited by the government. In fact, the possibility of an audit How can plan sponsors adequately prepare? We are all familiar with the prospect of getting our personal tax Maintaining your plan records, documents and notes in an or7. Are elective deferrals limited to the amounts under IRC 8. Have you timely deposited employee elective deferrals? 10. Were hardship distributions made properly? document and IRC § 72(P)? 9. Do participant loans conform to the requirements of the plan Usually, an agent will notify you indicating that your plan has §402(g) for the calendar year? is a great motivator to help us all keep accurate records and follow the rules. But what happens if your firm’s 401(k) plan gets audited? ganized manner will assist in both keeping you out of an audit and IF YOUR PLAN IS SELECTED FOR AN AUDIT help make an audit go smoothly if examined. Your records should include, among other things, Minutes or Resolution documenting actions taken by the plan sponsor, the Plan Documents (including all and fidelity bonds, and nondiscrimination testing results. DOCUMENT, DOCUMENT, DOCUMENT amendments), recent Form 5500 filings (at least seven years) and Summary Annual Report (SAR), Summary Plan Description (SPD) with any modifications, payroll and contribution records, fiduciary sure that their plan is operated in a compliant manner is a list of written procedures. Documenting how your plan is operated not only provides those performing the duties with a basis for their actions, butions are calculated and remitted. years? In general, it is a good idea to maintain a checklist to assist with document? ating correctly. Examples of such important procedures include how plan compliance. You can start by answering the following questions: 1. Has your plan document been updated within the past few allocations used correctly? (ADP and ACP)? 2. Are your plan’s operations based on the terms of the plan ate employees under the terms of the plan? nity to make an elective deferral election? but can also provide proof to an auditor that the plan has been opernewly eligible participants are enrolled in the plan, and how contriOne of the key items a plan sponsor can have in place to help enbeen chosen for examination. A written notice will follow, which will include a list of items to be provided to the auditor for review. You should immediately reach out to your service provider and/or CPA to determine the support that can be given to you. Do an assessment of the requested documents to see whether they are in your possesneed before scheduling the actual appointment. Don’t be afraid to ask for a reasonable extension if you need more time - it’s better than audit from your service provider, CPA or attorney. FINDING A MISTAKE with respect to your 401(k) System (EPCRS) to fix the isconsequences qualification. There are three compoof possible plan prior to any audit, you may use the IRS’s Employee Plans Compliance Resolution sue and, hopefully, avoid the nents of the EPCRS: Self Correction Program, Voluntary Closing Agreement Program. to correct certain operational Correction Program and Audit The Self Correction Proplan deficiencies without submitting to the IRS. As a general rule, the plan sponsor has two higher sanctions and plan disIf you discover a mistake sion, which will help you determine how much prep time you will presenting incomplete documentation. Try to have assistance at the WHO IS THE AUDITOR? ment plans are covered by the other things, ERISA specifies protections for participants dictates the fiduciary responsiAdministration (EBSA) of the and the Internal Revenue Service (IRS) periodically perform enforce the provisions and proand the Internal Revenue Code. bilities of plan sponsors. Both Employee Retirement Income Security Act (ERISA). Among and beneficiaries, as well as the Employee Benefit Security Most private sector retire3. Is the plan’s definition of compensation for all deferrals and 4. Were employer matching contributions made to all appropri6. Were all eligible employees identified and given the opportu5. Has the plan satisfied the 401(k) nondiscrimination tests gram allows a plan sponsor Department of Labor (DOL) audits of these pension plans to tections provided under ERISA 34 Greater Los Angeles Leadership Exchange

Table of Contents for the Digital Edition of Leadership Exchange - August/September 2011

Leadership Exchange - August/September 2011
Robert Half Legal
Contents
Member Connection Campaign
President's Message
Editor’s Message
Region 6 Officers
August Calendar
September Calendar
Save The Dates
September Chapter Meeting Notice
2011 Justice Jog Law Firm Challenge
Human Resources
Certified Document Storage & Destruction
Business Partner/Member Mixer | Justice Jog Kick-Off
Members-In-Transition Welcomes You
GLA ALA Section Reports
American Language Services
Merrill Corporation
New Members & Member Updates
Region 6 Conference
New Member Spotlight
New Member Drive Contest
Information Technology
June Chapter Meeting Recap
New Member Orientation Invite
Community Outreach Program
2011 Justice Jog
First Legal Network
Past-Presidents Evening Seminar Recap
Iron Mountain
Special Counsel
SOS — Succeed Over Stress
Innovative Computing Systems
GLA ALA Essay Contest
Board of Directors
Finance
Office Space Available Ad
Esquire Innovations, Inc.
Ricoh Legal/Ikon
Pride of Los Angeles
Afinety
Technology Tip
CBM Services
Davidson Legal Staffing
Coach’s Corner
ESP Legal Technology
WAMS
Business Partner Spotlight
Steelcase
ALA Webinars
ALA Legal Marketplace

Leadership Exchange - August/September 2011

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