Top 401(k) Errors Identified by the IRS
One of the areas less experienced benefit plan auditors tend to overlook are the plan details. Lack of attention to these details leads to plan errors, which can create a "snowball" effect of problems for a business owner. The IRS has identified the following items as those they encounter most often:

• Plan document errors:
  1. Working copies not executed
  2. Inability to locate a signed copy of the Plan document
  3. Failure to have required amendments, etc.
     
     
• Failure to:
  1. Follow terms of Plan document
  2. Use Plan's definition of compensation
  3. Follow Plan's matching contribution provisions
  4. Satisfy the 401(k) ADP and ACP nondiscrimination tests
  5. Include all eligible employees
  6. Limit elective deferrals to the maximum allowed under IRC 402(g)
  7. Deposit elective deferrals in a timely manner
  8. Follow Plan's loan provisions and violation of IRC 72(p)
  9. Follow Plan's terms regarding hardship distributions
     

A review of your plan document and how its provisions are followed should be done annually so as to avoid these Plan errors and potential tax & penalty consequences for your Plan and/or its participants.

You can find a checklist with these issues and links to determine how to find, fix and avoid each error on the IRS website at http://www.irs.gov/pub/irs-tege/401k_mistakes.pdf

Our Offer
Not sure where to turn...call us. We will provide an initial consultation at no cost to help assist you in the process. We have seen companies overfund or underfund plans based on what their perception of the process is versus how the plan was initially set-up. Our offer can be applied to any type of plan; i.e. 401K plan, 403b, pension, etc.

Sincerely,

Kathy Musial, Audit Manager
BIK & CO, LLP
Phone (847) 281-3199
kmusial@bikcpa.com
www.bikcpa.com