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TOP 4 401(k) Plan Mistakes and how to fix them. James R. Griffin Jackson Walker L.L.P. TOP 4 401(k) Plan Mistakes and how to fix them. Important: Tax Qualification 401(k) Plans must be tax-qualified: In form In operation. TOP 4 401(k) Plan Mistakes and how to fix them.
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TOP 4401(k) Plan Mistakesand how to fix them. James R. Griffin Jackson Walker L.L.P.
TOP 4401(k) Plan Mistakes and how to fix them. Important: Tax Qualification • 401(k) Plans must be tax-qualified: • In form • In operation
TOP 4401(k) Plan Mistakes and how to fix them. Disqualification: Adverse Consequences • Pay tax penalties • Open to litigation by participants • Violate loan covenants • Lose creditor protection • Withhold audit report for Form 5500
TOP 4401(k) Plan Mistakes and how to fix them. Key Points to Remember: Tax Qualification Mistakes • How can I find mistakes? • What are the four most common errors? • How can I fix them?
TOP 4401(k) Plan Mistakes and how to fix them. How Can I Find Mistakes? • Feedback from 401(k) recordkeeper • Annual testing reports • Phone calls, emails & letters • Management letter from annual CPA audit of plan • Internal compliance audit • DOL investigation • IRS audit
TOP 4401(k) Plan Mistakes and how to fix them. What Are The Four Most Common Errors? • Untimely adoption of plan amendments • Untimely enrollment of eligible employees • Errors in the definition of compensation • Errors with loans and hardship withdrawals
TOP 4401(k) Plan Mistakes and how to fix them. How Can I Fix Mistakes? • Self-Correction Program—SCP • Voluntary Correction With Service Approval - (VCP) • Audit Closing Agreement Program – Audit Cap
TOP 4401(k) Plan Mistakes and how to fix them. Stay Informed • Retirement News for Employers • Periodic email newsletter from IRS • Includes information about: • New rules affecting retirement plans • Retirement plan forms and plain language publications • Retirement seminars geared toward employers and owners • Developments from other federal agencies
TOP 4401(k) Plan Mistakes and how to fix them. Visit this Web site to Subscribe http://www.irs.gov/retirement/article/0,,id=122823,00.html For link send email to: Jim Griffinjgriffin@jw.com 214-953-5827