Defined Benefit Plans Have Issues Too

Defined  benefit plans may have markedly declined (44% since 1975 according to the Department of Labor), but they haven’t become any more understandable to employers. Indeed, the IRS continues to find the same type of mistakes during audit examinations. Here are the ones that made the IRS Top Ten list: Failure to meet minimum funding requirements Inadequate or no fidelity bond Mistakes in determining vestting or benefit accruals Prohibited transactions Failure to meet participation and coverage requirements Discrimination in benefits  Improper tax deductions  Non-compliant plan documents Failure to make Required Minimum Distributions Violation of joint and survivor rules Those of us in the retirement plan business use the term “audit roulette”. It refers to the belief by some employers that the odds of their retirement plan getting audited by the IRS are in their favor. Well, those odds are getting worse. The IRS is taking technology to the…

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