Top 12 Compliance Errors in DC Plans

By Fred Barstein • April 24, 2014 • 0 Comments

Qualified retirement plans offer employees significant tax savings and have become a mainstay of most group benefits. But to maintain their qualified status, they must comply with a set of comprehensive rules and regulations. Failure to comply can result in the immediate taxation of all participants and the loss of the business expense for company contributions, as well as personal and legal repercussions for fiduciaries.

In the 2014 edition of The Advisor’s Guide to 401(k) Plans, authors Bruce Tannahill and Louis Richey outline the 12 most common compliance errors compiled by the IRS: 

  • Not updating plan documents to reflect legal changes
  • Not complying with plan documents
  • No consistent definition of compensation
  • Failure to make matching contributions
  • Failure to apply ACP nondiscrimination test results to HCEs’ contributions
  • Exclusion of eligible participants
  • Improper limiting of deferral amounts
  • Not depositing deferrals on a timely basis
  • Non-compliant loans
  • Non-compliant hardship withdrawals
  • Failing to correct top-heavy plans
  • Failure to file Form 5500

The book seems to be a worthwhile addition to any plan sponsor’s and plan administrator’s library, especially to help with educating new staffers.


Fred Barstein is NAPA Net's Editor-in-Chief.