Annual administration of a retirement plan is the process of correlating the plan design and the plan sponsors data to determine appropriate coverage, contribution and reporting requirements under the Internal Revenue Code. From a functional point of view this process consists of and requires:
- Annually gathering complete census and trust data.
- Analyzing that data.
- Reviewing dates of hire and termination to determine plan entry, vesting and distributions.
- Performing the annual compliance testing functions.
- Preparing the annual plan valuations.
- Communicating contribution options and/or requirements.
- Preparing annual employer and sometimes employee reports.
- Preparing annual 5500 tax returns and all associated attachments for signature and filing by the employer.
- Review fiduciary compliance issues from a document, operational and investment point of view and advise the plan sponsor of concerns.
The most important annual function, however, is also the one most often overlooked, it is to take a conceptual view of the plan(s), think about the goals and aspirations of the plan sponsor and ask whether the plan is serving those ends. A plan design that solved a retirement plan issue for a small employer, may inadvertently create problems as that employer grows. These problems can often be avoided if an overview of the employer and the employer’s evolving business is maintained.