For a quick review to see if you meet some basic requirements in operating your business’s retirement plan, get a one-page IRS Checklist of 10 questions for your specific plan. The Checklist does not cover all plan requirements, so you should not use it as a complete plan review. It is, however, an easy way to start your plan check-up.
Sample of Checklist Questions:
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Have you identified all eligible employees?
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Are participants receiving their contributions as specified in the plan?
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Did you deposit the contributions in your employees’ IRAs on a timely basis?
Answering “yes” to all 10 checklist questions may indicate that your plan is in good shape. You should share your answered checklist with your benefits professional to verify all is well.
Answering “no” to any 1 of the 10 checklist questions lets you know on the spot that you may have a mistake in the operation of your plan. Help is available.
Electronic Version with Links to Expanded Explanations
An electronic version of each Checklist with links to expanded explanations for each question is available:
Note: The Checklist is for a business owner’s use. It is not to be filed with the IRS. Use of the Checklist is strictly voluntary.
Tips, Publications, and Forms for the Operation of Your Retirement Plan
You and your employees expect a retirement plan to deliver what’s promised.
Use these tips and resources to help ensure that the plan you and your employees count on is in good running order.
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Watch for law changes.
Keep the plan up-to-date with the law. Ask your benefits professional “when and what” to change in your plan. Those who specialize in retirement programs may provide auditing and plan review services.
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Perform periodic review of your plan.
Errors in a plan brought on by changes in your work force and its salary deferral patterns are easier and cheaper to fix when they are small and have not been allowed to continue over a long period of time. Changes in your business may produce unexpected changes in your plan’s operation.
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Get an independent reviewer to check your plan.
An independent reviewer may see something that has been overlooked by others, which could save you and your employees’ money, and may improve benefits.
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Use the Following Publications and Forms:
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Publication 560
Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
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Form 5304-SIMPLE
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)-Not for Use With a Designated Financial Institution
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Form 5305-SIMPLE
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)-For Use With a Designated Financial Institution
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Form 5305-SEP
Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement
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Form 8881
Credit for Small Employers Pension Plan Startup Costs
Need to Make a Correction? We Can Help.
Mistakes don’t go away by themselves.
The IRS has helpful correction programs that are structured to provide financial incentives for finding and correcting mistakes earlier rather than later. In fact, many mistakes can be corrected easily, without penalty and without notifying the IRS.
The IRS system of retirement plan correction programs, the Employee Plans
Compliance Resolution System (EPCRS), helps business owners protect participant benefits and keep their plans within the law. EPCRS includes:
Self-Correction Program (SCP) - With this program, you can find and correct a mistake before an examination. It will cost less if you find the error and fix it. A problem found within two years of when it first occurred can often be self-corrected. If an error has continued for longer than 2 years, you may have to pay a fee.
Voluntary Correction Program (VCP) - You may correct your plan’s mistakes with help from the IRS. The fee for IRA-based plans is $250.
Audit Closing Agreement Program (Audit CAP) - If the IRS examines your plan and finds an error, you can still correct the problem. You should be aware that the fee will be larger than if you had found and fixed the error yourself, or brought it in voluntarily.
Common Mistakes
Reviewing the Checklist questions for your plan could help you avoid common errors in the operation of your business’s retirement plan. The IRS frequently finds the following mistakes in retirement plan examinations.
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not covering the proper employees
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not giving employees required information
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not depositing employee deferrals timely
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not depositing employer contributions timely
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not following the terms of the plan document
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not limiting employee deferrals and employer contributions to the proper maximum limits
Want to Save Time and Money? Think Check-Up Now!
A winter check-up keeps your vehicle reliable through the harsh season.
A quick summer check-up adds to a safe and more relaxing vacation trip. In
either case, a check-up helps ensure that you have a solid, well-oiled, dependable machine when you need it.
Likewise, you want the same type of safety and reliability for you and your employees through your business’s retirement plan. Just like your automobile, a retirement plan needs regular attention and care to keep it operating well. Take a retirement plan check-up now and save time, paperwork, and money for you, your business, and your employees.
Examples of savings include:
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minimize paperwork
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cut administrative hours
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optimize employees’ gains for financial security
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safeguard your employees’ money
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protect financial output of your business
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lead to a better plan for your business
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increase tax return accuracy
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enhance portability of retirement assets
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minimize extent of mistakes
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fix it yourself
...bottom line, a check-up today makes for a more secure tomorrow.
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