The IRS's Top 7 Responsibilities

for Plan Sponsors

If you have an employer sponsors retirement plan, you’ve taken an important step for both your organization and your employees. As the plan sponsor, there are important responsibilities that must be adhered to. Find out what these responsibilities are so you can make sure you meet your fiduciary requirements.

1. Keep Your Plan Compliant

In the words of the IRS: “You, the employer, are responsible for keeping your plan in compliance.”

Your plan document must comply with the Internal Revenue Code stipulations.
You must administer your plan so it operates in agreement with all terms.
You must review your plan annually to make sure it operates according to all terms and laws.

2. Check Your Adoption Agreement

In the words of the IRS: “Double-check the options you selected in your adoption agreement.”

If you have an adoption agreement, make sure you understand the terms of the plan.

When your employees can participate in your plan
What types and amounts of contributions are allowed
How employer distributions are distributed
When participants are vested, and when how they will receive benefits

3. Know What Your Service Agreement Covers

In the words of the IRS: “Know what your service agreement does and doesn’t cover.”

Stay on top of changes to the law and update your plan document when necessary
Make sure you’re following rules for participation, contributions, and distributions.
When required, file forms or documents with the IRS or DOL.
If your plan requires testing, know when it is due.
Keep all participant records updated.

4. Communicate with Your Pre-approved Plan Provider

In the words of the IRS: “Talk to your pre-approved plan provider.”

“Pre-approved plans are an easy way to start a retirement plan, and offer employers an alternative to designing their own retirement plan. If you have a pre-approved plan, you should:

Understand the costs and fees of your pre-approved plans.
Keep the IRS advisory letter for your pre-approved plan.
Make sure all plan amendments are signed on time.
Inform your provider if you make changes to your business or your plan terms.

5. Communicate with Your Plan Service Provider

In the words of the IRS: “Communicate with your plan service provider and/or payroll department.”

Communicate frequently with your plan service provider for:

Changes to compensation or employees.
The amount you’re compensating each participant.
Employee data for plan eligibility and benefit payments.
Plan terms that show employee contributions, payments, and loans.
Any changes to the plan, such as loan provisions.

6. Keep up with Plan Maintenance

In the words of the IRS: “Keep up with plan maintenance responsibilities.”

Follow these steps to keep your plan up to date and remain qualified for tax benefits.

Review your service provider’s reports, especially fees, minimum distributions, and consensus to these payments.
If your plan allows participant loans, ensure full compliance with terms.

7. Follow the Rules

In the words of the IRS: “Keep up with the rules.”

Learn more about retirement plan reporting and disclosures here.
If you file Form 5500 annually, you can find it here. For distributions, use Form 1099-R.
If you find a retirement plan reporting error, many can be corrected without penalty. Find out more here.

How TruthPoint Can Help Ease Your Plan Administration

The ongoing responsibility you have as the plan sponsor of your retirement plan can become both demanding and time-consuming.

At TruthPoint Financial, our goal is to make your plan administration as easy as possible so you can focus on other important matters of your job. That’s why we partner together to simplify your administration process.

Learn more about how we can help you or give us a call today and we’d be happy to explain our process.