Top 4 401 k plan mistakes and how to fix them
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TOP 4 401(k) Plan Mistakes and how to fix them. James R. Griffin Jackson Walker L.L.P. TOP 4 401(k) Plan Mistakes and how to fix them. Important: Tax Qualification 401(k) Plans must be tax-qualified: In form In operation. TOP 4 401(k) Plan Mistakes and how to fix them.

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TOP 4 401(k) Plan Mistakes and how to fix them.

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Top 4 401 k plan mistakes and how to fix them

TOP 4401(k) Plan Mistakesand how to fix them.

James R. Griffin

Jackson Walker L.L.P.


Top 4 401 k plan mistakes and how to fix them1

TOP 4401(k) Plan Mistakes and how to fix them.

Important: Tax Qualification

  • 401(k) Plans must be tax-qualified:

    • In form

    • In operation


Top 4 401 k plan mistakes and how to fix them2

TOP 4401(k) Plan Mistakes and how to fix them.

Disqualification: Adverse Consequences

  • Pay tax penalties

  • Open to litigation by participants

  • Violate loan covenants

  • Lose creditor protection

  • Withhold audit report for Form 5500


Top 4 401 k plan mistakes and how to fix them3

TOP 4401(k) Plan Mistakes and how to fix them.

Key Points to Remember: Tax Qualification Mistakes

  • How can I find mistakes?

  • What are the four most common errors?

  • How can I fix them?


Top 4 401 k plan mistakes and how to fix them4

TOP 4401(k) Plan Mistakes and how to fix them.

How Can I Find Mistakes?

  • Feedback from 401(k) recordkeeper

    • Annual testing reports

    • Phone calls, emails & letters

  • Management letter from annual CPA audit of plan

  • Internal compliance audit

  • DOL investigation

  • IRS audit


Top 4 401 k plan mistakes and how to fix them5

TOP 4401(k) Plan Mistakes and how to fix them.

What Are The Four Most Common Errors?

  • Untimely adoption of plan amendments

  • Untimely enrollment of eligible employees

  • Errors in the definition of compensation

  • Errors with loans and hardship withdrawals


Top 4 401 k plan mistakes and how to fix them6

TOP 4401(k) Plan Mistakes and how to fix them.

How Can I Fix Mistakes?

  • Self-Correction Program—SCP

  • Voluntary Correction With Service Approval - (VCP)

  • Audit Closing Agreement Program – Audit Cap


Top 4 401 k plan mistakes and how to fix them7

TOP 4401(k) Plan Mistakes and how to fix them.

Stay Informed

  • Retirement News for Employers

    • Periodic email newsletter from IRS

    • Includes information about:

      • New rules affecting retirement plans

      • Retirement plan forms and plain language publications

      • Retirement seminars geared toward employers and owners

      • Developments from other federal agencies


Top 4 401 k plan mistakes and how to fix them8

TOP 4401(k) Plan Mistakes and how to fix them.

Visit this Web site to Subscribe

http://www.irs.gov/retirement/article/0,,id=122823,00.html

For link send email to:

Jim [email protected] 214-953-5827


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