Being the administrator of the company retirement plan can be quite complicated and time consuming which may lead to errors. The IRS has listed 12 of the most common compliance errors found in retirement plans. The most common errors found are, the failure to:
* Follow the plan document terms in operation.
* Make routine deposits of employee elective deferral amounts on a timely basis.
* When a plan is “top heavy”, make mandatory minimum employer contributions to the plan.
* Handle all deferral allocations and deferral elections in a plan, using the same definition of “compensation”.
* Make a deferral election that results in a lost deferral opportunity that includes “all” eligible employees in the plan.
* Under Section 402(g) limit amounts for a calendar year, as well as the failure to make all required distributions of any deferrals that exceed the limits, to any affected plan participants.
* Make matching contributions to all appropriate employees by an employer.
* Update the 401k, required plan documents with the mandatory laws that govern the 401k plans.