1. Plan Document Review:
Ensure the plan document is up to date, accurately reflects the plan's provisions, and complies with relevant laws and regulations. This review helps identify any inconsistencies or gaps that may lead to compliance issues.
2. Participant Eligibility and Contributions:
Verify that all eligible employees are enrolled in the plan and that contributions are being made accurately and in a timely manner. This helps ensure fair treatment of employees and compliance with contribution limits.
Confirm that the vesting schedule is correctly applied to participants' accounts. This is crucial to ensure that employees receive their entitled benefits based on their years of service.
4. Investment Monitoring:
Assess the plan's investment options and review the investment policy statement to ensure they align with the participants' best interests. Monitoring investment performance helps protect participants' retirement savings and demonstrates fiduciary responsibility.
5. Prohibited Transactions:
Examine transactions involving parties with a prohibited relationship to the plan, such as plan sponsors, trustees, or certain family members. Identifying and addressing prohibited transactions helps maintain plan compliance and protects participants from potential abuses.
6. Participant Loans and Distributions:
Review loans and distributions made to participants, ensuring they comply with the plan's provisions and applicable regulations. This helps prevent unauthorized or non-compliant distributions, protecting the plan's integrity.
7. Compliance Testing:
Perform various compliance tests, including the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests, to ensure the plan does not favor highly compensated employees. This testing maintains plan eligibility and avoids penalties.
8. Fiduciary Responsibilities:
Evaluate the actions of plan fiduciaries to ensure they have acted prudently, loyally, and in the best interests of plan participants. This assessment helps mitigate potential legal and financial risks for the plan and its fiduciaries.
9. Plan Expenses and Fees:
Review the plan's fees and expenses, including investment management fees and administrative costs. Assessing the reasonableness of these expenses helps ensure participants' assets are not unreasonably depleted and promotes transparency.
10. Internal Controls:
Assess the plan's internal controls to identify any weaknesses or gaps that could lead to errors or fraud. Strong internal controls safeguard the plan's assets and provide reliable financial reporting.