Are you a new administrator of a 401(k) Plan? There are many different terms, some of which you may not be familiar with. It is important that you understand the different roles and responsibilities each has to the Benefit Plan to make sure the plan remains compliant with the Department of Labor and Internal Revenue Service regulations, the Plan Document and ERISA (the Employee Retirement Income Security Act of 1974). Seven key terms are:
- Plan Sponsor –The company that offers the plan to its employees.
- Plan Administrator – The named individual has day to day responsibility for working with the Plan to make sure all transactions are processed accurately and in a timely manner.
- Plan Trustee –The individual designated in the Plan Document or Trust Document has the authority to manage and control plan assets.
- Financial Advisor – this individual provides investment advice or guidance to the Plan and the Plan Trustee to assist in asset selection or investment performance review.
- Recordkeeper – usually a third-party provider that processes and tracks transactions at the participant level such as contributions, loan activity, distributions, etc.
- Third-Party Administrator – Assists the Plan with annual ERISA compliance including discrimination testing, Form 5500 preparation and filing, participant notice preparation and Plan Document maintenance.
- Custodian – another third-party provider that holds the Plan assets.
As the plan sponsor, when it’s time to audit your plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Summit CPA we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. For assistance contact our office at (866) 497-9761 to schedule an appointment.