Retirement Plans – How Often is a Compliance Check-Up Needed?

Written By Amy Kennedy

Health experts tell us we should get a physical once a year and then when we reach a certain age, additional testing should be done routinely. Plan sponsors should consider that the same applies to a company's defined benefit and defined contribution retirement plans.
Compliance, including assurance that governmental and plan document guidelines are satisfied, is an important responsibility for plan sponsors. It is the fiduciary responsibility of the plan sponsor to routinely undertake a compliance review. Both defined benefit and defined contribution plans should have a check-up every five to ten years.

Complacency can lead to issues, resulting in added costs and liabilities, especially when a company has undergone an acquisition, merger, or spinoff. Changes in staffing resources and vendor relationships can also be a catalyst for reviewing the administrative compliance of retirement plans.

Plan sponsors may claim, "nothing has changed", however, with a little more prompting, they may recall that within the past ten years payroll systems have changed twice, the administration vendor changed once, and they have acquired three "new" companies.
Even if plan provisions have not changed, legislative policies and laws are constantly changing in the retirement industry. Many of the changes require adjustments to both defined benefit and defined contribution plans.

Defined benefit and defined contribution compliance reviews can range from a limited scope review of specific provisions or transactions, such as pensionable earnings for a defined benefit plan, or loans for a defined contribution plan, to a full scope review of all provisions and operational transactions within a plan.

When was the last time your organization's retirement programs were reviewed for compliance?

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