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Follow on Google News | The Value Of A Specialized 401(k) Audit: Help Improve Your PlanProvided by The Retirement Group 800-900-5867
By: The Retirement Group: Your Partners in Retirement It can reveal hidden flaws and help you improve the plan. Why do companies request specialized audits of their 401(k)s? After all, the standard annual audit that large companies routinely attach to Form 5500s may seem adequate. Yet a specialized audit may reveal things that have gone unnoticed for years, or conditions that should be improved. There are four types of specialized 401(k) audits: operational reviews, investment option reviews, compliance audits and governance audits. Operational reviews. Sometimes the procedures of a plan aren’t being followed – the plan document says something should be done one way, and in real life it is being done quite another way (or not at all). Maybe your plan document says that at the end of the plan year, any participant forfeitures of your company’s discretionary 401(k) contributions are to be reallocated among other plan participants. Well, maybe that hasn’t been done since 2007. An operational review can help an HR officer uncover and fix these things before the Department of Labor or the IRS has to get involved. These audits are designed to make sure that recordkeeping goes according to the plan document, and they may even include analyses of employee investment patterns. That brings us to the next type of specialized audit … Investment option reviews. What kinds of account fees are plan participants being charged by the plan provider? Do they seem high? Do other plan providers present more investment choices with lower fees? Is it time to evaluate the current investment options in light of the original IPS (Investment Policy Statement)? This type of review can assess the investment scope (and financial potential) of the current plan. Compliance audits. You don’t want your plan to commit prohibited transactions or violate ERISA rules. So are payments and loans from the plan being made on time? Are account beneficiaries being named correctly? Have new hires been properly informed about the 401(k)? Are the vesting rules being correctly applied? These audits confirm that a 401(k) is operating according to the plan document and federal regulations. If two plans have merged or a new plan has been adopted, or if one plan administrator has left and another has come in, these reviews may prove very illuminating. Governance audits. Is the plan sponsor fulfilling its fiduciary responsibility? Worth the cost? Yes. These specialized audits can bring flaws in a 401(k) to light – leading to a 401(k) that is more efficiently managed, more attractive to new hires and key personnel, and more in line with rules and regulations. Visit us on the web: http://www.theretirementgroup.com Sign up to receive our newsletter: http://www.theretirementgroup.com/ John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese Philip Catalan, Brent Wolf, Andy Starostecki, The Retirement Group, AT&T, Verizon John Jastremski is a Representative with QA3 Financial and may be reached at The Retirement Group 800-900-5867 This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’ This does not constitute an endorsement by John Jastremski, The Retirement Group or the author of the book. The opinions expressed are solely those of the author and may or may not be a representative opinion of The Retirement Group or John Jastremski. # # # We are a group of financial professionals who focus entirely on retirement planning and the design of retirement portfolios for the corporate transitioning employee. End
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