January 31, 2006 |
Posted By Diane Pfadenhauer |
IRS To Increase Scrutiny of Pensions
The IRS has announced that it is stepping up its scrutiny of retirement plans such as traditional pensions, 401(k)s and profit sharing plans. According to this article, small businesses are likely to be most out of compliance. In my travels working with small and large businesses alike, I've seen a host of issues:
- Outsourcing the plan administration and taking the attitude that "they handle it"
- Handling loans and hardship withdrawals incorrectly
- Placing respnsibility for internal administration in the hands of administrative employees not trained in this area
- Failing to provide required communications - all too often I've heard people say that the employees take care of it all on line
- Failing to follow the terms of the plan (sounds obvious but it happens ALL the time)
The moral of the story is that it doesn't matter how big or small you are. No matter who internally is charged with the administration of the plan, they ought to know what they are doing. Your accountant, your payroll service and your benefits consultant are NOT responsible for your plan.