Do you know if your 401(k) plan is broken?

401(k) plans require much maintenance to meet fiduciary requirements. There are many mistakes that can creep in over time that put you out of compliance. Here’s a list of potholes that can wreck your plan with the IRS:

–         Not updating your plan to reflect current laws

–         Not operating the plan in accordance with the plan document

–         Incorrect definitions of compensation for deferrals and allocations

–         Lack of consistency with employer matching contributions

–         Failing the 401(k) ADP and ACP nondiscrimination tests

–         Excluding eligible employees

–         Not making timely deposits of employee elective deferrals

–         Incorrectly administering participant loans or hardship distributions

–         Not making required minimum contributions

–         Delaying filing the Form 5500-series return

–         Not distributing a Summary Annual Report to all plan participants

Instead of losing sleep over the problems that come with non-compliance, the IRS provides a simple to understand 401(k) plan fix-it guide. The guide includes how to find, fix and avoid mistakes. Regular review of this list and making note of your compliance actions can save you time and work when it’s time for an audit.