NASHVILLE — This year, the Department of Labor has increased the penalties it levies against retirement plan sponsors for noncompliance — and it doesn't take much to be hit with a fine.

The prospect of a DOL audit can be terrifying for organizations, and many times, non-compliance is inadvertent.

But for some organizations, the warning signs a retirement plan – and the plan sponsor responsible for it are in trouble are pretty obvious.

Here are warning signs the DOL lists that would get any plan sponsor's head out of the sand – if not before, but certainly after employees reported them to the DOL:

1. Employee 401(k) or individual account statements arrive consistently late or at irregular intervals.

2. Account balances aren't accurate.

3. Transmittal of contributions to the plan isn't happening on a timely basis.

4. A significant drop in account balance occurs, unrelated to normal market activity.

5. Paycheck contributions to employee 401(k)s or individual accounts aren't being made.

6. Employees find that investments listed on their statements are not what they authorized.

7. Benefit payments to former employees are late or incorrect.

8. Unusual transactions appear, such as a loan to the employer or corporate officers.

9. Investment managers and consultants are frequently changed, without explanation.

As the IRS says, “A retirement plan needs regular attention and care to keep it operating well.” There's no set-it-and-forget-it button, no matter how much we'd like one.

Here are 12 less-drastic, more typical mistakes companies make around compliance and their retirement plan:

1. Failure to update plan documents.

2. Failure to follow plan terms.

3. Not giving eligible employees the opportunity to make an elective deferral.

4. Failure to correctly follow plan compensation for allocations and deferrals.

5. Failure to make employer-matching contributions for all employees.

6. Failure to pass the non-discrimination test.

7. Failure to verify deferral limitations of IRC Section 402(g) were satisfied.

8. Not depositing employee elective deferrals in a timely manner.

9. Failure to ensure participant loans follow IRC requirements.

10. Failure to make the proper minimum contributions to a top-heavy plan.

11. Making improper hardship distributions.

12. Failure to file a Form 5500.

Be sure to check out recommendations from the IRS on how to prevent such mistakes.

Fortunately, plan sponsors are not alone. Hundreds of organizations offer checklists and explanations of steps to ensure your plan remains compliant.

And of course, government resources exist to help as well. At the least, they remind us of the importance of plan sponsors following the rules, submitting paperwork, meeting deadlines, and avoiding noncompliance penalties. Here are a few:

IRS checklist of 401(k) plan duties – Publication 4531 (Rev. 10-2014): This is an at-a-glance chart of duties 401(k) plan sponsors must do yearly to be in compliance. However, as the chart says in bold letters, the 12 tasks outlined on the checklist are not comprehensive.

Reporting and Disclosure Guide for Employee Benefit Plans (Sept. 2017): This is a more in-depth guide, organized in table format.

Tax information for retirement plans – IRS web page: This site details the basics of retirement plan administration, with links to resources.

Instant Insights /

Compliance is tough but plan sponsors are not alone

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