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Compliance

NWPS Perspective: The SECURE Act

Here is NWPS' memo to clients and advisor partners summarizing The SECURE Act and What It Means to Your Plan.  Here are a few key takeaways for those focused on retirement plans: Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½) Allows long-term, part-time workers to participate in 401(k) plans Offers more options for lifetime income strategies Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses   Please contact your NWPS consultant or [email protected] if you have any questions.

Navigating a DOL Plan Audit

In 2013 the Department of Labor completed 3,667 401k plan investigations. Their audits found violations in almost 75% of the cases. The result (not including 88 criminal indictments) was $1.7 billion in re-imbursments and fines - an average of $618 k per plan.

DOL Retirement Plan Audits to Rise Dramatically

In this article from Benefits Pro the author notes that DOL fines for non-compliance are up dramatically in 2013 and it is expected that this trend will continue in 2014. We have recently learned that the DOL has hired 15,000 new auditors over the last year. In 2013 the DOL collected $1.69 Billion in fines, up from 2012’s $1.27 Billion. As compliance becomes more complex and oversight increases, now is a good time for Plan Sponsors to ensure that their plans are in compliance. See this article for the Top 10 Audit Problems.

Top 10 401k Audit Problems

When the Internal Revenue Service (IRS) launched a series of “LESE [Learn, Educate, Self-correct and Enforce] examinations” last year, one of its intentions was to discover trends in compliance failure among qualified retirement plans. Here are the most frequently cited compliance errors. By avoiding these mistakes, compliance experts say sponsors can go a long way toward navigating—or avoiding—IRS audits. Full article over at Plan Sponsor.   1. Failing to amend plan design to comply with current law in a timely fashion 2. Failing to procure adequate fidelity bonding 3. Not following plan terms for loan and distribution processing. 4. Neglecting to allocate contributions and forfeitures in keeping with the plan terms. 5. Failure to properly run nondiscrimination tests. 6. Failure to deposit elective deferrals into the trust in a timely manner. 7. Using an incorrect definition of compensation per the plan terms 8. Failing to monitor plan contributions to ensure they do not exceed dollar limits or the deductible limit for employers. 9. Distributions of excess deferrals are incomplete, not timely or improperly calculated. 10. Not filing the final Form 5500.   Pro Tip: The IRS chose plans with invalid business codes on their 5500’s – if you can’t get your own business code right, what are the chances you are running your 401(k)