TOP 10 RETIREMENT PLAN BEST PRACTICES
1. Ensure that beneficiary information is collected and maintained for all participants in the plan, including terminated employees with a balance in the plan. Review beneficiary information with participants periodically to ensure information is up to date.
2. Know your plan entry dates – be sure to notify new employees when they are eligible to enroll and provide them with an enrollment package and if applicable, the Safe Harbor/Automatic Enrollment/QDIA notice. Keep copies of plan waivers/opt-out forms. The participant notice will need to be distributed on an annual basis to all eligible participants.
3. Maintain copies of all deferral election forms submitted by participants to facilitate administration and avoid discrepancies.
4. Obtain or maintain a Fidelity Bond for the greater of $1,000 or 10% of plan assets (not required to be greater than $500,000). Bond information is needed for 5500’s. Contact your insurance agent or BSGI for more information.
5. Maintain copies of all Form 5500’s and all Schedules – know where they are filed for easy access for auditing purposes. File the annual 5500 on a timely basis (prepared by BSGI – due 7 months after the close of the plan year).
6. Be sure all Plan Documents and Amendments are timely signed and dated. Keep copies in your files. If the plan was to terminate, keep documents for a minimum of 7 years.
7. Provide new employees with a Summary Plan Description (SPD) within 90 days of becoming a participant in the plan (part of the BSGI document package).
8. Ensure payroll contributions are submitted on a “timely” basis. Timely is defined as “as soon as administratively feasible”. You must be consistent with the timing of this deposit. If you can contribute within 2 days after the payroll end date, you must deposit each payroll within 2 days. Late deposits can trigger a Department of Labor (DOL) audit and result in penalties and expensive corrective actions.
9. To avoid top heavy status, which requires a mandatory employer contribution, the total key employees’ balance must be less than 60% of the total plan balances on the last day of the plan year.
10. Use the plan definition of compensation for deferrals and employer contributions (refer to Adoption Agreement).
DOCUMENT FILING TIP: While you should keep original, signed plan documents, almost everything else can be stored electronically. Saving PDF copies to a network drive through your scanner/copier is a great way to store important plan information and save space!