IRS Help for Small Business Employer Plans

Monday, October 06, 2014

By Beverly DeVeny, IRA Technical Expert
Follow on Twitter: @BevIRAEdSlott

The IRS website includes several valuable free employer retirement plan resources. One example is their newsletter Retirement News for Employers. The October 2, 2014 edition can be found here: http://www.irs.gov/Retirement-Plans/Retirement-News-for-Employers

There is a section of this newsletter on starting an employer plan. It includes resources to help business owners compare the various plans available. There is an overview of the different types of employer plans and a comparison chart to help the business owner determine which type of plan best meets his or her needs.

The next section of the newsletter focuses on operating the plan and correcting mistakes. Too often the small business owner is unaware of the rules that come with the plan they have adopted for their business. This can lead to mistakes in the operation of the plan. The IRS website has checklists and fix-it guides to help business owners keep their plan in compliance. Many errors are minor and can be easily corrected. Others will entail the use of one of the IRS correction programs. There are two important things to remember here.

1) A mistake should never be ignored as it could mean disqualification of the entire plan.
2) IRS will work with the business owner to fix any mistakes. They do not want to see a plan disqualified and the employees of the business lose their tax-deferred retirement savings.

The third section of the newsletter talks about how to terminate a retirement plan. In most cases, there are steps that need to be taken in addition to distributing out any assets of the plan.

Even if you, as a small business owner, have an advisor helping you with your plan and its investments, it is always a good idea to have some knowledge about the plan you are about to adopt or that you may have already adopted. Chances are, you are the plan administrator. That means you are in charge and responsible for doing things in accordance with the plan rules.

 

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