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February 05, 2014 at 08:09 AM
If a company retirement plan isn’t in compliance with IRS or Department of Labor regulations, both employers and employees could be hurt financially.
In 2013, the DOL collected $1.69 billion in fines, voluntary fiduciary corrections and informal complaint resolutions, a 33 percent increase over 2012’s $1.27 billion tab.
When plans are out of compliance — and according to Department of Labor data, the problem is getting bigger all the time — employers or their employees are stuck paying taxes and penalties.
“Most 401(k)s and pension plans are not in compliance with IRS or Department of Labor regulations. The shocking part is that most employers don’t care and only correct the problems when they get caught,” according to Brett Goldstein, director of retirement planning at American Investment Planners LLC, in Jericho, N.Y.
The most common DOL violation is the failure of the trustee to timely remit 401(k) contributions and loan repayments to the plan. The most common IRS violation is the failure to have the proper plan documents, he said.
