We recommend including everything from documentation and benefit calculations to day-to-day administrative processes on your compliance checklist. Once you have a checklist, set a timeline for completing a compliance review. These can take between six weeks and six months to complete.
Case Study: Reducing Cost and Risk With an Operational Review
A company recently engaged USICG after it discovered operational issues causing delays in its automatic enrollment process. USICG performed a full scope review of all functions related to the 401(k) plan to determine the level of document and operational compliance.
Using documentation and reporting provided by the company and the plan’s recordkeeper, USICG completed a thorough review of the following areas: eligibility and entry dates, reconciliation of employee contributions from payroll to recordkeeper, timing of contribution deposits, definition of plan-eligible compensation, and participant distributions (including force-outs and hardships).
USICG presented a report of its findings for each area of review, including a list of participants impacted. The report included recommendations for day-to-day plan administration to ensure regulatory compliance with the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code going forward.
Further, USICG assisted the company with correcting the discovered errors by utilizing the voluntary correction procedures available through the DOL and IRS, reducing the correction cost and avoiding penalties had the errors been identified under IRS or DOL audit. By bringing the plan into compliance, the company was able to mitigate future risk of negative findings under audit.2