We are more than halfway through the retirement plan audit season and we have noticed a number of common errors occurring with compensation. I previously discussed these issues in my blog series “Compensation: The Missing Link – Part 1” and “Compensation: The Missing Link – Part 2,” but we want to revisit the issue, since we are seeing this error occur on a rather consistent basis.
Posted by Maria T. Hurd, CPA The Rule When plans have a Qualified Joint and Survivor Annuity default form of benefit, or when a plan offers life annuity options, spousal consent must be obtained for any distribution or loan out of the plan, except when the plan provides for involuntary cash-outs for balances amounting to $5,000 or less. Qualified plans … Continued
A benefit of 457(b) plans is that participants have the opportunity to contribute the maximum deferral contribution to both the 457(b) plan and another qualified plan.
Administering hardship distributions correctly is important to prevent the hardship of completing a correction of an error in administration. Often, plan officials assume that their third party administrator is collecting all the information necessary for the approval and proper processing of a hardship, when that is not always the case.
State or local governments and organizations that are tax-exempt under IRC Section 501(c) can establish a 457(b) plan to allow their employees to defer income taxation on retirement savings, similar to how the more popular 401(k) plans operate, but with some important differences, including the availability of hardship distributions.
When employer-initiated personnel reductions occur and it reduces the number of plan participants by 20% or more, a partial termination of a qualified plan is deemed to have occurred.
Pursuant to the Form 5500 instructions, plan sponsors must enter the current value as of the beginning and the end of the plan year on the Schedule H: Statement of Net Assets Available for Benefits.
Posted by Maria T. Hurd, CPA As a result of recent changes to the AICPA-approved language for audit reports, unqualified audit opinions will no longer confuse plan sponsors and service providers who associate the word qualified with compliance. New accounting pronouncements have changed the phraseology used to indicate the plan’s financial statements are not materially misstated from “unqualified opinion” to … Continued
Many nonprofits who sponsor ERISA 403(b) plans are not aware that they need an audit, because counting participants involves much more than knowing how many full-time employees the organization has or how many account balances are in the plan.
As discussed in one of our previous blog posts How to stop a non-elective contribution, circumstances and factors often arise that have us wishing that a commitment that we had entered into had an escape clause.