When you think about retirement plans, you don’t tend to think IRS. But if your business operates a retirement plan for its employees then the IRS, and of course your employees, expect that you keep it in good shape and optimized for the best financial return.
Giving your business retirement plan a check-up, whether it’s a 401(k), IRA, SEP, or 403(k) can also help you save time, money and paperwork – as well as increase tax return accuracy. Some of the common mistakes that the IRS looks-out for in retirement plan examinations include:
– Not covering the proper employees
– Not giving employees required information
– Not depositing employee deferrals in a timely fashion
– Not following the terms of the plan document
– Not limiting employee deferrals and employer contributions to the proper maximum limits
All these errors can impact the tax benefits of operating a business retirement plan, and expose you to audit and penalties, so it’s a good idea to continuously monitor and review your plan. Here are some tips from the IRS for keeping your plan compliant, and fixing errors should they occur.