Are you an employer with a 401(k)? Is your plan compliant?

Are you an employer with a 401(k) plan?

Service providers will soon be required to disclose all of their fees and service charges to plan sponsors (employers).

Beware, as in addition to disclosure to plan sponsors, service providers will also be required to disclose fees and service charges to employees of the employer.

The law requires that fees be reasonable. Dissatisfied employees will be able to complain to the US Department of Labor. Many will be surprised at the amount of the fees.

As such, now is the time to have your plan reviewed by a qualified professional. Said professional should not only check the fee is reasonable, but also inquire as to whether the plan itself is compliant, and has made all the proper elections.

If problems are found, then attorneys and accountants can be brought in to file for governmental voluntary correction programs.

Remember, if employer is caught with significant plan violations by the IRS or the US Department of Labor, then these voluntary correction programs may be unavailable. Significant fines can be assessed for plan violations, and plans can even be disqualified. As such, it pays to be proactive and have your plans reviewed. Many companies rely on third-party administrators to administer their plans. However, the plan sponsor (employer) is still ultimately responsible for any violations.

On a final note, fees are an important factor in determining whether a service provider is appropriate. However, fees should not be the only consideration.

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