401k Audits

Managing a benefit plan can be a challenging task. There are multiple rules and regulations which must be followed including those mandated by both the IRS and the Department of Labor (DOL). Many of these originated with the Employee Retirement Income Security Act of 1974 (ERISA) which was designed to provide a broad framework for how plans should function including rules on plan administration, participant access, annual audits, and more.

The importance of robust cybersecurity controls and policies was on full display recently as the news of a ransomware cyberattack on the Colonial pipeline emerged. Cybercriminals were able to disrupt the delivery of fuel to the east coast pushing many into a frenzy due to dwindling fuel supplies.

Expanding retirement saving opportunities for American workers has been an ongoing priority for Congress over the past several years. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, made significant and important changes designed to increase saving opportunities.

The need for a robust cybersecurity program is essential to protect personally identifiable information (PII) such as social security numbers, taxpayer identification numbers, financial account information, credit card information, and even physical and email address. Cybercriminals are increasingly looking to exploit IT systems to capture high-value information that can be used or sold to criminals.

From time-to-time issues arise in the administration of an employee benefit plan. It is bound to happen given the sheer number of rules and regulations plan sponsors must adhere to. To facilitate resolution the IRS has established the Employee Plans Compliance Resolution System where plan sponsors can go to resolve open issues including prohibited transactions. This happens when a transaction occurs between a plan and a disqualified person. Such transactions can arise from plan loans to certain participants and even fiduciary self-dealing.

Many Atlanta businesses offer retirement plans as a benefit to employees to encourage savings and as a vehicle for the tax-free investment of contributions. These plans are one of the most effective means of encouraging participation and helping employees build a solid financial foundation for retirement. In fact, they are so effective that the Setting Every Community Up for Retirement (SECURE) Act implemented several changes to incentivize businesses to offer retirement plans. While offering a plan is essential to saving, plan sponsors should also maintain communications with participants to meet compliance requirements and to disburse important information on benefits.

As the end of the year quickly approaches there are only a few weeks left before the holidays. For many Atlanta businesses, this is a time to analyze financial performance, review operational benchmarks, assess vendor relationships, review financing and credit opportunities, and outline a path forward in 2021. There is little doubt that many plans for 2020 were interrupted by the COVID-19 pandemic requiring mid-year adjustments.

The COVID-19 pandemic created a host of new challenges and issues never before experienced by Atlanta business owners. It started with forced business closures and stay at home orders and has transitioned to new safety protocols, limits on gathering sizes, and more. Many businesses have elected to transition to a remote work environment to protect against virus transmission. Despite these measures,  it was recently reported the seven-day rolling average of new Coronavirus cases has increased 42% since October 2nd which likely means additional restrictions.

As plan sponsors are quickly approaching the October 15th filing deadline the focus is on taking care of last-minute details with the plan auditor. Ensuring all questions are answered and any last-minute information is provided is essential in the final weeks. Once the deadline passes, plan sponsors will then focus on ensuring compliance with the changes mandated in the SECURE and CARES Act by the end of the year.

The SECURE Act implemented in late 2019 and the CARES Act which passed earlier this year outlined several changes to how retirement plans are required to operate. While adoption of certain changes is optional, others are not, requiring the plan sponsor to make plan document amendments.