Employers get IRS advice, fee cut on fixing retirement plan errors
Q&A with Brandon Longpublished in The Oklahoman | April 10, 2015
Just recently, the Internal Revenue Service issued new guidance regarding the correction of retirement plan errors. The change, said employee benefits attorney Brandon Long, is welcome news for employers.
In an interview with The Oklahoman, Long said the IRS is significantly reducing the filing fees it charges plan sponsors who need to correct certain errors in order to maintain plan compliance. Common mistakes made include allowing employees to borrow more than the specified limit under IRS rules, failing to pull 401(k) deferrals from bonus awards, and failing to deposit 401(k) funds into their plan’s trust within a few days of their payroll date. Left uncorrected, errors can result in financial penalties for employers, possible tax consequences for employees, and the potential for a plan to lose its tax-qualified status.
For employers who make a mistake, Long had this advice: “Retirement plans are complex and mistakes happen all the time. That’s why the IRS and the Labor Department have such great correction programs. If you discover an error, don’t panic. Figure out the correct way to fix it and fix it.”