Academic journal article Journal of Accountancy

Tune Up Your Clients' Benefit Programs: Even the Best-Oiled Machines Need a Little Energy Boost Sometimes. If Your Clients Are Large Companies, Review the Pitfalls That Could Jeopardize the Tax-Favored Status of Their Employee Benefit Plans

Academic journal article Journal of Accountancy

Tune Up Your Clients' Benefit Programs: Even the Best-Oiled Machines Need a Little Energy Boost Sometimes. If Your Clients Are Large Companies, Review the Pitfalls That Could Jeopardize the Tax-Favored Status of Their Employee Benefit Plans

Article excerpt

* Make sure that agreements with service providers clearly disclose both direct and indirect fees, including float income, shareholder service fees and 12b-1 fees. Pay only those amounts the Labor Department considers legitimate plan expenses. Paying other types of expenses can lead to charges of breach of fiduciary duty and prohibited transactions, as well as the payment of interest and penalties.

* Deposit 401 (k) contributions in a timely and regular fashion. Depositing funds quickly even once may be viewed as binding by the Department of Labor and become the standard by which all other deposit times are judged for compliance.

* Revise distribution forms to reflect any new regulatory requirements. Some plans are currently required to add "relative value" language regarding optional plan distribution alternatives that will require changes in the distribution forms of affected plans.

* In the case of health plans, revise the plan procedures and forms to comply with new final COBRA regulations.

* Review the procedures followed by the company officials who appoint your plan's fiduciaries (typically company directors). If necessary, revise them to make sure they comply with the standards the Department of Labor articulated in high-profile cases such as Enron. …

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