Are your SEPs and SIMPLEs at Risk? Mistake number 7 – Have your plan notification requirements been met? Employees must be given a Summary Plan Description detailing the terms of the employer’s plan. Required for a SIMPLE IRA is an explanation to employees of the opportunity to make salary deferrals to the SIMPLE IRA plan and the ability to select a financial institution for their IRAs. Also included is a statement notifying the employees of the employer decision whether to make a matching or non-elective contribution. At one review of a SARSEP, the IRS auditor asked for the following information. Signed forms showing the participant deferral elections, payroll runs, copies of the checks for the deferral amounts from the employer account and financial statements showing the dates and deposits of those amounts into the individual IRAs. The employer did not think it important to maintain the records of the individual IRAs to prove timely deposit. Apparently, these records need to be maintained as well. You can Self-Correct if there is a mistake that is insignificant, otherwise use the IRS Voluntary Correction Program.
Posted on: Tue, 22 Apr 2014 15:55:23 +0000
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