Whether you are a business owner or a senior employee with management responsibilities, understanding some of the issues regarding your organizations biggest off balance sheet risk, your employee benefit plans, can be very helpful for you. Taking into consideration the significant number of investment failures occurring today within Benefit Plans, the wide range of investment alternatives, the complexity of the tax laws governing the qualifications of the Plan and the fiduciary responsibilities of the Trustees, it is all the more critical that any benefit plan is adequately reviewed and due diligence is conducted in order to assure compliance and avoid or minimize future liabilities.

Although an audit is typically performed only when a company has more than 100 plan participants, nonetheless it can be very advantageous to conduct a review even if the Plan is below the 100 employee threshold.   This is especially true because Third Party Administrators (TPA) do not perform a detailed review of your plan leaving your Company vulnerable to noncompliance in a wide variety of scenarios.

If you are the business owner, you can decide to be proactive and take steps to protect your Company. As such, you might agree to a course of action that includes a review of the Company Plan, looking specifically at some key issues that commonly create the most vulnerability, such as:

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  • Fiduciary Duties
  • High Plan Fees
  • Plan Document Compliance
  • Funding Issues
  • Errors in Contributions
  • Auto Enrollment
  • Hardship Withdrawals
  • Allocation of the Forfeitures Account
  • Definition of Compensation
  • Internal Controls
  • Requirements of the DOL/IRS 
  • Plan Design
  • Timely Employee Communications
  • Enrollment Packet
  • Employer Match
  • Unnecessary People in the Plan
  • Loan Policy
  • Investment Policy
  • Discrimination Testing
  • Amendments
  • Impermissible Plan Withdrawals


This is an extensive list, and it is easy to see how these violations can occur, even when they are unintended.

If the DOL or IRS comes knocking at the door, and the Organization hasn’t had a checkup (recognizing that the TPA is not responsible for this) – who will ensure they are operating in compliance with DOL regulations and IRS Code? If there is anything that is overlooked, the company may unintentionally be exposed to large fines and penalties.   

We suggest that a review, whether mandated or not, can help the Company reap benefits similar to those gained by purchasing an insurance policy.