PLANSPONSOR - December 2022-February 2023 - 17

here when performing a plan review, says Casey. The plan document
may define compensation differently than the way the
payroll provider implements it for purposes of calculating participants'
elective deferral amounts and the employer match. For
example, employers often give out gift cards to employees as a
reward, and the value of these cards gets reported on an employee's
W-2 form. Unless the plan document specifically excludes
the value of these cards from the definition of compensation, it
should be included in deferral and match calculations. Failure to
do that is an operational error.
This issue often ultimately stems from an employer's HR
department and payroll department miscommunicating with
each other, Casey says. " Bringing the two groups together when
you do a plan review, so they get on the same page, is critical, "
she says.
2) Staff working on a 403(b) plan implement the employee
eligibility requirements incorrectly. This comes up most often
with clients such as hospitals or universities, which may have a
large number of part-time or temporary employees, Casey says.
With some exceptions, universal availability regulations require
that not-for-profit employees participating in a 403(b) plan-i.e.,
those who get a W-2 form-must be eligible to make a deferral
contribution. " Basically, the whole employee population has to
be covered, " she says. Staff members working on the plan may
not realize there are rules for eligibility, she adds.
3) The employer takes too long to transfer a payroll-deducted
401(k) contribution to the recordkeeper. While this process largely
has been automated in recent years, it is still a manual process at
some employers to initiate the transfer. " In these cases, it's usually
just that somebody working on the plan at the employer missed
something, and it fell through the cracks, " Casey says.
Finishing the Review
If the review identifies operational
problems, the next phase is to work
on remedies. If a plan has made
specific errors, such as late
employee enrollment, Geloneck
suggests dealing with those
issues first. If certain errors are
identified early, sponsors may self-correct using
the IRS' Self-Correction Program or file an IRS Voluntary
Correction Program application, which can eliminate or
significantly lessen the penalties the plan will pay.
Large operational issues such as plan governance,
payroll coordination and cybersecurity processes usually
get addressed after that. " Typically, you're putting out the
immediate fires first and then looking at the broader issues, " she
says. " Looking at the broader issues tends to be a longer process
but can result in significant savings and administrative efficiencies
for the plan later. "
A plan review should conclude by proactively thinking
through whether additional processes need to be put in place to
prevent future operational errors. It really helps to create a plan
operational guide, so the HR department has a road map that
spells out how it will accomplish plan administrative tasks, and
when, Casey advises. " It marries together the plan provisions
with the nuts-and-bolts operations of how your plan works, " she
adds.
The operational guide specifies all the necessary processes
for plan administration, such as for enrolling a newly eligible
employee, uploading payroll data and approving loans and distributions.
" In the guide, you outline: 'This is our process for each
task, and this is when it needs to happen.' It comes down to
documenting how you're going to do each piece of work, training
people internally to do it and then going back and doing an
annual review to see if anything needs to change, " she says. " It's
a living, breathing document-it's not something where you put
the guide together and then it's 'one and done.' If all plan sponsors
did this plan review, they'd have fewer messes that they'd
have to clean up later. "
Every year, Employee Fiduciary gives 401(k) plan clients an
administration checklist that spells out what plan operational work
needs to get done each quarter and the deadline for completing
it. For example, the first quarter lists distributing contribution
refunds to participants if a non-safe-harbor plan failed its nondiscrimination
testing for the previous year and the sponsor
wants to avoid a 10% IRS excise tax. It also lists ongoing
responsibilities throughout the year, such as
timely remittance of participant contributions.
" We do most of the heavy lifting
on plan administration, but there are
some things an employer needs to do, "
Droblyen says. " Having the checklist
keeps people on track, and that keeps
them from feeling overwhelmed. "
Remember, too, that a good
401(k) provider-meaning the
recordkeeper and especially the TPA-will help substantially
to keep a sponsor's plan administration on track,
Droblyen says. " So my advice is, just don't ignore
them: If the provider sends you an email, pay
attention to it. [That provider's] trying to keep
you safe. " -Judy Ward
PLANSPONSOR.COM December 2022 - February 2023 17
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PLANSPONSOR - December 2022-February 2023

Table of Contents for the Digital Edition of PLANSPONSOR - December 2022-February 2023

INSIGHTS
RULES & REGULATIONS
PARTICIPANT ANALYSIS
UPFRONT
Risk Protection
Benchmarking Beyond Fees
Exploring ESG Investing
In Case of Emergency
Employee-Owned
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover1
PLANSPONSOR - December 2022-February 2023 - Cover2
PLANSPONSOR - December 2022-February 2023 - 1
PLANSPONSOR - December 2022-February 2023 - INSIGHTS
PLANSPONSOR - December 2022-February 2023 - 3
PLANSPONSOR - December 2022-February 2023 - RULES & REGULATIONS
PLANSPONSOR - December 2022-February 2023 - 5
PLANSPONSOR - December 2022-February 2023 - 6
PLANSPONSOR - December 2022-February 2023 - PARTICIPANT ANALYSIS
PLANSPONSOR - December 2022-February 2023 - UPFRONT
PLANSPONSOR - December 2022-February 2023 - 9
PLANSPONSOR - December 2022-February 2023 - 10
PLANSPONSOR - December 2022-February 2023 - 11
PLANSPONSOR - December 2022-February 2023 - 12
PLANSPONSOR - December 2022-February 2023 - 13
PLANSPONSOR - December 2022-February 2023 - Risk Protection
PLANSPONSOR - December 2022-February 2023 - 15
PLANSPONSOR - December 2022-February 2023 - 16
PLANSPONSOR - December 2022-February 2023 - 17
PLANSPONSOR - December 2022-February 2023 - Benchmarking Beyond Fees
PLANSPONSOR - December 2022-February 2023 - 19
PLANSPONSOR - December 2022-February 2023 - 20
PLANSPONSOR - December 2022-February 2023 - 21
PLANSPONSOR - December 2022-February 2023 - 22
PLANSPONSOR - December 2022-February 2023 - 23
PLANSPONSOR - December 2022-February 2023 - 24
PLANSPONSOR - December 2022-February 2023 - 25
PLANSPONSOR - December 2022-February 2023 - 26
PLANSPONSOR - December 2022-February 2023 - 27
PLANSPONSOR - December 2022-February 2023 - Exploring ESG Investing
PLANSPONSOR - December 2022-February 2023 - 29
PLANSPONSOR - December 2022-February 2023 - 30
PLANSPONSOR - December 2022-February 2023 - 31
PLANSPONSOR - December 2022-February 2023 - 32
PLANSPONSOR - December 2022-February 2023 - 33
PLANSPONSOR - December 2022-February 2023 - In Case of Emergency
PLANSPONSOR - December 2022-February 2023 - 35
PLANSPONSOR - December 2022-February 2023 - Employee-Owned
PLANSPONSOR - December 2022-February 2023 - 37
PLANSPONSOR - December 2022-February 2023 - FIDUCIARY FORUM
PLANSPONSOR - December 2022-February 2023 - INSIDE ANGLE
PLANSPONSOR - December 2022-February 2023 - PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover3
PLANSPONSOR - December 2022-February 2023 - Cover4
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