Common Compliance Issues for 401(k) Plans: How TRA Can Help
- Nondiscrimination testing ensures 401(k) plans are fair to all employees, but failing these tests can result in corrective actions like refunding contributions.
- Late deposits of employee contributions can lead to fines and additional reporting requirements under Department of Labor regulations.
- Keeping plan documents updated with regulatory changes is essential to maintaining compliance and avoiding disqualification.
- Employers must provide timely participant notices, such as SPDs and fee disclosures, to meet legal requirements.
Offering a 401(k) plan is a fantastic benefit for your employees, but staying compliant with ever-changing regulations can be a challenge. From administrative missteps to regulatory requirements, 401(k) compliance issues can arise for businesses of any size. Left unaddressed, these challenges can lead to penalties, audits, or even disqualification of your plan.
The good news? The Retirement Advantage, Inc. (TRA) specializes in simplifying compliance so your business and employees can focus on building a secure future.
The Most Common 401(k) Compliance Pitfalls
- Nondiscrimination Testing (NDT) Issues
Annual nondiscrimination testing ensures contributions and benefits don’t disproportionately favor highly compensated employees. Plans that fail these tests often require corrective actions, such as refunding contributions, which can disrupt the plan and create administrative strain. - Late Employee Contribution Deposits
The Department of Labor requires employee contributions to be deposited into the plan as soon as administratively possible. Missing deadlines—even unintentionally—can result in fines, interest, and additional reporting requirements. - Missed Amendments or Document Updates
Regulatory changes happen often, and plans must stay current to comply with IRS and Department of Labor guidelines. Overlooking an update can lead to noncompliance, putting the entire plan at risk. - Participant Notice Errors
Employers must provide clear and timely notices, like Summary Plan Descriptions (SPDs) and annual disclosures. Missed communications can lead to legal issues and employee dissatisfaction. - Operational Errors
Errors such as miscalculating employer matches, excluding eligible employees, or failing to follow the plan’s terms are common—and avoidable with the right support.
TRA: Your Trusted Partner in Compliance
No matter the size of your business or the complexity of your plan, The Retirement Advantage, Inc. (TRA) has the expertise to help you avoid these pitfalls. Our dedicated team ensures your 401(k) plan stays compliant by managing regulatory updates, streamlining administration, and proactively identifying potential issues.
With TRA by your side, you can rest assured that your retirement plan is in capable hands. We focus on the details so you can focus on what matters most—running your business.
Contact TRA today to learn more about how we can create a compliant, custom 401(k) solution tailored to your business needs. Let us help you provide a plan that works for your employees—and for you.
