1. Can we perform a limited-scope audit, or do we need a full-scope audit to satisfy the DOL?
2. Do we have all of the financial records up to date and easy to locate?
3. Do we need to file a Form 11-K with the Securities and Exchange Commission (SEC)?
4. Do we have a list of internal controls by which the auditor can assess the risks of material misstatement of the financial statements?
5. What is the auditor’s responsibility regarding supplemental schedules required by the DOL?
6. Is tax-exempt status an issue? If yes, will the auditor give an opinion regarding the plan’s qualification in that regard?
7. Will the auditor be responsible for information for the Form 5500 and/or Annual Report?
8. How will the auditor communicate ERISA compliance issues found during the audit – verbally or in writing?
9. What is the auditor’s responsibility regarding electronic filings?
10. Have we agreed upon estimated delivery time, fees and billing arrangements?

Asking these questions will set expectations and fulfill your fiduciary responsibility to your plan participants. We recommend keeping a written record of all correspondence and requesting verbal communications to be confirmed in writing.

1. Request a new determination letter. Work with your third party administrator to ask the IRS to review your revised plan document and issue you a favorable determination letter. The plan prototype may already have been deemed acceptable by the IRS and if this is the case make sure that you retain a copy of the letter.

2. Check the letter for consistency with your amendments. If you find an error, fax the letter sent to you with an explanation of the correction needed.

3. Administer the plan to according to the plan document. Failure to follow your plan document can nullify the tax exemption awarded by the IRS’ determination letter.

To request corrections for errors or to get a copy of your current determination letter, send your request via fax to 513-263-4330 and include:

-         Plan sponsor’s name, EIN and phone number

-         Plan name and number

-         Year that the letter was issued

-         Fax number to send the copy of the determination letter

If you prefer to mail your request, send to: Attn: Manager, EP Correspondence, IRS, P.O. Box 2508, Room 5-120, Cincinnati, OH 45201

For more information, see a list of FAQs about determination letters.

1. Document the current situation of services provided and costs/fees. Determine if additional services are needed or desired.
2. Write an RFP to include the following information:
   • Current plans the provider administers.
   • Experience with retirement plan administration.
   • Types of proprietary investments and their performance history.
   • Administrative process for plan sponsors and participants.
   • Pricing
   • Transition plan
3. Distribute the RFP to no fewer than three providers.
4. Conduct site visits based on best possible candidates revealed by the RFP submissions.
5. Document decisions and criteria for each step of the selection process, including:
   • Contract terms
   • Performance standards
   • Reference checking
   • Fee negotiation
6. Make a recommendation to an internal committee of fiduciaries. Invite plan participant representation.

Plan administration is a competitive market. You may find that your existing vendor is the best one for the job. But you’ll be well-covered and documented in your decision to retain services. Clarity and communication are the keys to best fiduciary management of your retirement plan.

1. Know what fees you pay and be prepared to justify them to your plan participants as well as the DOL.
2. Be sure that record-keeping fees are documented separately from investment management fees.
3. Diversify your plan portfolio, offering choices to plan participants.
4. Communicate all changes to your plan participants and employees – clearly and promptly to avoid any misunderstandings.

Your plan auditor is a good source of information about ways to keep your plan in top fiduciary shape. Another good resource is the AICPA’s Accounting and Auditing Resource Centers.

1. Answer plan participant questions in a timely and concrete manner

Your communication with plan participants is best put in writing whenever possible. Documenting answers to questions that come from plan participants about their
specific situation keeps everyone on the same page.

2. Prepare and distribute a Summary of Material Modifications (SMM) or Summary Plan Description (SPD)

You technically have 210 days after the plan year in which the changes are adopted to communicate changes. However, you’re better off preparing and distributing
materials as soon as possible to make sure that those affected by the changes can act accordingly. And, the task is complete – it won’t be overlooked with the passing of time.

3. Keep records of how and to whom SMM or SPD notices were sent.

If it’s possible for plan participants to somehow miss a piece of communication about plan changes, you need documentation to prove that the proper notice was sent in the time required by ERISA. Documentation may be as simple as a mailing list of recipients.

4. Remember that all plan participants and surviving beneficiaries need a notice, not just current employees.

This communication tip may seem obvious, but unfortunately, it’s not always followed.

1. Make discretionary amendments for plan design changes

Whether a defined benefit (DB) or defined contribution (DC) plan, any plan design changes that you want to be effective for the 2012 plan year need to be adopted by the
end of 2011. Examples of amendments include changes to automatic enrollment or matching amounts.

2. Complete in-plan Roth conversions

Earlier this year, I wrote about in-plan conversions to Roth accounts, part 1 & part 2. If you have an employee who wants to split the conversion amount between 2011
and 2012, be sure that proper documentation is executed prior to December 31, 2011.

3. Amend DC plan documentation if you suspended 2009 required minimum distributions

The Worker, Retiree and Employer Recovery Act (WRERA) of 2008 allowed DC plans to treat 2009 required minimum distributions (RMDs) as eligible rollover distributions. Make sure that your plan document is amended to reflect the 2009 RMD rollovers if you took advantage of this provision. (You were able to defer documentation until now.)

When to distribute:

-         Required minimum distributions (RMDs) are required at age 70 ½ or the year in which the participant retires (if after age 70 ½).

-         In the case of a SIMPLE IRA, SEP or if the participant is at least a 5% owner, RMDs must occur at age 70 ½, regardless of retirement status.

How to calculate required minimum distributions:

-         Generally, the value of the retirement plan or IRA on December 31 of the prior year is divided by the life expectancy of the plan participant.

-         Life expectancy is determined by one of three tables in Publication 590 (Appendix C), based on marital status and age difference of spouse.

When to schedule payment:

-         Participant must take the first RMD by April 1 of the year following age 70 ½ or retirement.

-         In the following years, the participant must take the RMD by December 31, including the year that the distribution was taken by April 1.

Additionally, you must also give your employee the option to continue deferring salary after age 70 ½, if permitted by your plan.