Benefits Plan Compliance
Our employee benefit lawyers have found that many plan sponsors have not recently undertaken any systematic review of the procedures for administering their tax-qualified retirement plans and welfare benefit plans. With the numerous and complex changes in relevant legal requirements, as well as changes in administrative personnel, previously established procedures might not be adequate to detect errors that can occur in the administration of employee benefit plans. The risk is magnified by several factors: increased audit activity by the Internal Revenue Service and Department of Labor, recent aggressive IRS efforts to subject plan sponsors to significant penalties for plan operational errors, and the increase in ERISA litigation over plan-related activities.
A compliance review can be as narrow or as broad as a plan sponsor believes it needs. Our compliance reviews for several clients have involved only qualification, reporting and disclosure issues related to their qualified retirement plans. For other clients, we have reviewed not only their qualified plans, but also their welfare benefit plans. We also have reviewed compliance with ERISA’s fiduciary requirements and other plan investment issues (e.g., the possible applicability of various SEC and Commodities Futures Trading Commission rules).
In any compliance review, we review plan and trust documents and summary plan descriptions and compare those documents to other employee communications materials (e.g., forms, notices) to make sure the plan documentation is consistent. We also review recent annual reports (IRS Forms 5500) to determine whether there were any items disclosed that suggest qualification problems, prohibited transaction issues, or other matters raising potential fiduciary duty problems. After reviewing the documentation, we meet with the plan administrators to discuss certain administrative issues listed in a checklist we provide to the administrators for that purpose.
Once our review is completed, we then discuss with the plan sponsor any items that need to be corrected and, if the plan sponsor wishes, prepare a memorandum describing the issues and our recommendations in more detail. We also will discuss various options that might be available to make a full correction.
Contacts
- John P. Hendrickson PC
+1 312 984 7645
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