Will Your Retirement Plan Be Audited?
Back in 1995, the IRS and Department of Labor (DOL) found many opportunities to fine 403(b) plans inside of non-profit hospitals. Since they found so many hospital plans out of compliance, they began to move on to school districts. And guess who's next? That's right—the non-profit Christian organizations.
It isn't IF you'll be audited, it's WHEN you'll be audited. So let's make sure you're ready. As we reviewed the violations, most of them came from overlooked items and errors by the Plan Sponsors.
According to the DOL, most plan failures occurred because of the following 5 reasons.
1. Ignoring Plan Document guidelines
This one seems pretty simple, but be sure to follow your Plan Document guidelines. This is crucial!
2. Discriminating against employees
Make sure you are treating employees fairly. If your organization is a church, you're actually allowed to discriminate, but there are some organizations that aren't giving employees anything while the executive team is getting quite a bit. Be sure to provide a balance in your plan.
3. Not offering universal availability
““It isn’t IF you’ll be audited, it’s WHEN you’ll be audited.”
Make sure your plan offers universal availability. That means that each person, full and part-time, must be eligible to voluntarily contribute to the plan.
4. Reporting inaccurately
Make sure that your recordkeeping and reporting are complete and accurate.
5. Not depositing contributions on time
Confirm you are depositing your participants' contributions and processing loans in a timely manner. There are strict requirements for both of these.
How do you think your faith-based organization's retirement plan will fair when your plan is audited? Will you get a seal of approval or a fine? Does your plan meet all the legal guidance and compliance standards? Don't take any chances. Review your plan today. Take the necessary steps to ensure your faith-based organization will pass the audit that we know is coming your way. This will keep you on the pathway to a successful plan.