Employment: 401(K) Spring Cleaning

04.01.09

A couple of times a year, you should review your 401(k) retirement plan, along with all benefit plans to determine that all is in order (doesn't Spring seem like an appropriate occasion?). While not exhaustive, the list below will guide you in reviewing your 401(k) and other defined contribution plans.

  1. Has your Plan been amended for all changes in the law?
  2. Are the terms of the Plan being followed (a common mistake)? Prepare up-to-date and clear policies and procedures to be followed.
  3. Have employees been allowed to enroll in the Plan on time?
  4. Does the Plan have procedures in place to prevent excess participant deferrals; for 2009, $16,500?
  5. Are all participants who turn age 50 in a Plan Year allowed to make catch-up contributions (up to an additional $5,500)?
  6. Are employer matching contributions and non-elective employer contributions being made on a timely basis?
  7. Are the terms of the Plan followed in making plan loans: amount, interest rate, payback schedule?
  8. Does the employer submit to the trust all employee deferrals, catch-up contributions and loan payments in a timely manner? Such contributions must be made as soon as reasonably possible by the employer.
  9. Are the terms of the hardship rules for withdrawals being met? If an employee takes a hardship, is he prevented from making elective deferrals for the next 6 months?
  10. Have summary plan descriptions been updated in a timely manner and provided to participants?

To keep a Plan running smoothly, these are a few questions to address on a regular basis.

By Anita K. Chancey, achancey@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
litigation and counsels clients regarding everyday employment matters. 

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