Operational Compliance: Who’s in Control of the Controls?

In recent years, regulators have intensified their focus on retirement plan controls. Given this scrutiny, it’s critical that the proper procedures and controls are in place for your qualified plan.

Operational compliance controls are an area of focus for the regulators. Specifically, you should make sure that your plan operations are consistent not only with your plan document but also that they meet the terms and conditions of all applicable laws.

Failure to do so could expose your plan to penalties and high costs to correct errors identified during a plan audit. In a worst-case scenario, it could even lead to the loss of qualified plan status.

Evaluating your controls

One way to authenticate that your plan’s operational compliance controls are adequate is to evaluate them at each stage of a worker’s employment lifecycle. These stages typically include the following:

The summary should include triggering events applicable under the plan’s terms, commencement dates for distributions, different distribution options (e.g., installments, lump sums, annuities), and any required income tax withholding, among other information.

Organizing plan information

Your plan’s operational compliance controls should also authenticate that procedures are in place for the organization and retention of a wide range of plan information. This typically includes participant demographics and benefit determinations, testing results, consent forms, distributions, and applicable government filings, among other documents.

We can help evaluate your qualified plan’s controls to ensure proper procedures are in place.