Tips to Keep Your Retirement Plan in Compliance

FEBRUARY 6, 2024

A recent survey indicates 45% of retirement plan sponsors do not realize they serve as fiduciaries to their organization’s retirement plan.1 All fiduciaries need to follow best practices for ensuring their plans are operating according to the rules, regulations and governing plan documents. This process can be accomplished by creating a compliance checklist for 2024.

Self-Audits Reduce Liabilities

Whether or not you fully understand your role as a fiduciary, it’s critical that you comply with current legislation and regulations. In recent years, the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) have increased the number and frequency of retirement plan compliance audits. By properly maintaining, understanding and following plan documents, retirement plan sponsors and administrators can minimize or eliminate risk should their plan be audited.

No matter what type of plan you have, or whether it’s administered in-house or outsourced to a professional recordkeeper, consider conducting a proactive operational compliance review, or self-audit, to help your organization avoid added costs and liabilities in the future.

The DOL and IRS periodically publish lists of the most common noncompliance issues they find when reviewing retirement plans. Among the most common issues involving noncompliance are:

  • Plan document failures and operational failures related to the definition of compensation
  • Plan eligibility 
  • Loans, in-service distributions 
  • Vesting

This list is not exhaustive, but it’s a good reference for focus areas when reviewing your plan. USI Consulting Group (USICG) finds compliance issues in at least a third of the plans we review. USICG’s compliance experts can assist you with the review process and with correcting any found errors.

Create Your Compliance Checklist for 2024

A compliance checklist serves as a guide throughout the year. To help you create your own compliance checklist, USICG has summarized all 2024 compliance deadlines and action items, including detailed 2024 retirement plan compliance calendars:

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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.

Get Started With These 10 Tips

If you’re not currently using best practices — or you’re unsure if you are — consider these top 10 tips for maintaining retirement plans:

  1. Select and monitor plan investments regularly
  2. Perform ongoing monitoring and reporting, including on investments and participant activity
  3. Continuously check and benchmark plan expenses
  4. Grasp your fiduciary role and responsibilities
  5. Stay on top of regulatory updates and new regulations, including specific plan design and documentation requirements from SECURE 2.0 Act of 2022
  6. Secure protection and mitigate risk through fiduciary oversight
  7. Prepare for an audit with an independent operational compliance review
  8. Understand the impact of retirement plan design and offer a competitive retirement program
  9. Oversee the day-to-day plan administration, including reporting and recordkeeping requirements
  10. Help employees improve retirement readiness by developing and implementing a successful financial well-being program

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


2024 Retirement Plan Outlook: What You Need to Know

We hosted an informative national webinar discussing recent SECURE 2.0 updates and retirement plan compliance best practices. If you weren't able to attend, you can watch the recording to learn more.

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1 2023 Defined Contribution Plan Sponsor Survey Findings, J.P.Morgan Asset Management
2 Actual results will vary. The use of any stated benefits in this case study is intended for illustrative purposes only and may not be used to predict or project future results.

Investment advice provided to the Plan by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. Both USI Advisors, Inc. and USI Securities, Inc. are affiliates of USI Consulting Group.

This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1024.S0201.0008