Tips for Keeping your Plan in Compliance

The minute you’ve adopted a retirement plan, you take on certain responsibilities for its proper operation. These duties vary depending on what type of plan you choose, but almost always will include the following:

  • Timely enrollment of eligible participants.
  • Timely contributions required by the terms of your plan.
  • If your plan allows salary deferrals, withholding the proper amount and depositing the deferrals in employees’ individual accounts on time.
  • When certain events occur, you must tell your participants.
  • If required, annual testing must be done to ensure your plan benefits do not discriminate in favor of highly compensated employees.
  • If required, annual reports need to be filed with the IRS, DOL and PBGC.
  • In agreement with the plan terms, make distributions and loans.
  • Plan documents must be amended as needed to reflect current laws.
  • Correct any plan operating errors as soon as possible to ensure your plan remains tax-qualified.

Maintain your plan -- develop internal controls

It’s important to develop review procedures in order to prevent mistakes in administering your plan. Left uncorrected, mistakes could readily jeopardize your plan’s tax-favored status.


Your procedures for internal controls should include:

  1. Review of plan operations to ensure your plan is working according to its written terms.
  2. Make sure you understand the definition of Compensation in your plan document used to calculate benefits, especially if the company or its payroll provider is responsible for calculating employer contributions, such as a match or safe harbor contribution. Those calculations must exclude any compensation that is not includable under that definition. This is one of the top ten problems that the IRS or DOL looks for and often finds in a plan audit. When submitting annual census information to your TPA, be sure to report Section 415(c) Compensation as defined in your plan document and be prepared to report an alternate calculation that may be requested by your TPA for nondiscrimination testing purposes.
  3. Check for Document updates with your benefits expert for:
    o Changes in the law
    o Plan operations changes

Depending on your organization, your plan type and its features these exact procedures will vary.

Review of plan operations

As mentioned above, it is important that you conduct periodical reviews of your plan operations to ensure that you’re following the terms of your written plan, such as:

  • Loans and distributions are being made according to your plan rules.
  • All eligible employees are being included in your plan on a timely basis.


To assist your evaluation of your plan operations, review the policies, procedures and internal controls self-audit for sample questions.
You can quickly detect and correct any mistakes via regular reviews.

Updates for Plan documents

Check with your benefits advisor several months before your next plan year so that you know if you must amend your plan to reflect law changes and/or if you want to make operational changes.