Q. How do I avoid compensation-related errors in my company’s retirement plan?
Employers who offer employee benefit plan options should be certain that a proper compensation definition is applied when calculating employee deferrals and employer contributions, as it plays a critical role in the plan’s administration. Using an incorrect definition of compensation in your retirement plan can lead to costly operational failures that may impact contributions and benefits, nondiscrimination requirements, the employer’s deduction and more. These factors will subsequently affect your plan’s qualified status. To avoid compensation-related failures, the Internal Revenue Service (IRS) shares these tips:
Errors also commonly occur when plan administrators do not know each plan’s compensation definition or they are not notified when plans are amended. Be sure your plan administrators are properly trained and are kept up-to-date on changes to the plan’s compensation definition.
Elissa Posway, CPA, is a Shareholder in Doeren Mayhew’s Houston location, where she oversees the Employee Benefit Plan Group. She can be reached at via email or at 713.860.0232. For more information on how to avoid compensation-related errors, contact our employee benefit plan advisors today.
A quick registration is required to view our resources.
You will only be asked to do this one time (unless you don't save your browser cookies).