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Understanding the nuances between these roles is essential for ensuring the plans effectiveness and compliance. The plan sponsor, typically occupying a high-level position within the company such as the owner or managing director, shoulders the overarching responsibility for the retirement plan.
Enforce the plans terms for participation, contributions and distributions. Give the required plan notices to the participants. File required forms and documents with the IRS or Department of Labor. Determine any required testing and timely conduct it.
Usually corrected through DOLs Voluntary Fiduciary Correction Program. You may also need to correct through the IRS correction program. Deposit all elective deferrals withheld and earnings resulting from the late deposit into the plans trust.
What Is An Eligible Inadvertent Failure? That brings us back to the question of what, exactly, an EIF is. On the surface, its pretty simple an EIF is a failure that occurs despite the existence of practices and procedures a company has in place to facilitate overall compliance in how it operates its plan.
Typical errors that plan sponsors make: Do not file a final Form 5500 series return. Do not actually terminate their plan. Mistakenly indicate the plan is terminated when it is frozen. Mistakenly use the same plan number from a previous or different plan.
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Plan Document Failure: The plan document is missing something it should contain or includes language is not allowed to contain. Usually occurs when a plan sponsor does not update a plan document in a timely manner after a change in the law.
Some companies offer retirement savings plans, pension plans, or health plans to their employees as part of their employee benefits program. These companies are referred to as plan sponsors. Employers are typically plan sponsors, but unions and professional bodies could also be plan sponsors.
Under ERISA, an individual or entity that administers an employee benefit plan or manages plan assets is a fiduciary to that plan. The plan sponsor is always a fiduciary to the plan.