Failure to amend a plan for legislative changes on a timely basis

Top 10 retirement plan internal control pitfalls #9

Here are some corrective steps to amend a plan:

Amend the plan: Draft a plan document that is in compliance with all current laws and regulations.

Review prior plan administration to see if it complied with amended terms: The longer sponsors wait to take this step, the more difficult it becomes. Correct any administrative errors that may have occurred.

File a voluntary compliance program (VCP) request with the IRS: A fee based on the size of the plan must be paid. The objective is not to disqualify the plan or unduly punish the employer, but to bring the plan back into compliance.

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