Employee benefit and retirement plans are required to comply with a number of complex laws and regulations, and failure to do so can result in significant penalties.
Employee Benefit Plan AuditsThe Department of Labor (DOL) requires many employee benefit plans – generally those with 100 or more participants – to have an audit each year as part of their obligation to file an annual Form 5500 report. Inconsistent findings in this audit and report can raise red flags with the DOL and may prompt further examination.
In addition, the DOL conducts its own benefit plan audits, either randomly, due to an employee complaint or as a result of inconsistencies in the Form 5500 report. The DOL may levy fines for any inaccuracies or noncompliance issues.
Avoid Common ErrorsThere are countless infractions that an audit could uncover, some deliberate and some inadvertent. However, according to one CPA in a recent Employee Benefit News article, there are three mistakes that plan sponsors commonly make.
- Incorrectly defining compensation. This error is one of the most common and can be tricky and/or costly to correct. It often occurs when a plan sponsor fails to read the entire plan document – or reads it once but never refers back.
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