Not properly reviewing your Form 5500 can lead to big penalties

By Yariel Chiong

Have you ever read the statement above the signature line on your Form 5500? It says:
“Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete.”

If you are signing the form it is ultimately your responsibility that it is correct. That is why it’s important that your third party administrator (TPA) or whoever is preparing the form, sends it to you for signature with plenty of time for your review You must do your part by providing them with complete and accurate census when requested.

Poor preparation on behalf of your preparer is not an excuse that the government will accept. Ensure that you have properly reviewed the 5500 and accompanying schedules and are confident in it. Ask questions. If you are currently not an ACI client you can contact us for a limited review of your Form 5500 by one of our highly experienced staff.

Some background on the Form 5500:
The Form 5500, Annual Return/Report of Employee Benefit Plan, including all required schedules and attachments must be filed by the 7th calendar month after the end of the plan year unless a Form 5558 is filed and received by the Internal Revenue Service (IRS) before the due date. This will give you an additional 2 ½ months to file the form without penalties. So for example, if your plan is a calendar year end plan your Form 5500 will be due August 1, 2011 since July 31, 2011 lands on a Sunday this year. And if a Form 5558 is filed for extension, your Form 5500 will be due October 17, 2011.

All plans filing on or after 01/01/2010 are now required to be filed electronically through the Department of Labor’s Employee Benefits Security Administration (EBSA) website www.dol.gov/ebsa.

Penalties:
If your form is late, IRS penalties are $25 per day up to a maximum of $15,000. Department of Labor (DOL) penalties can be up to $1,100 per day with no maximum. In addition, for willful violations on your Form 5500, individuals can face up to $100,000 fine and/or imprisonment up to 10 years.

What to do?:
Ask questions! Do not sign and submit the forms until you are satisfied with the answers. If you have any questions for which you cannot get answers, call us!

New 408(b)(2) Compliant Engagement Contracts Will Expose the Industry’s Hidden Fees

By Yariel Chiong 
With the Department of Labor’s (DOL) regulation coming into effect this January 1, 2012 ACI has revisited its engagement contract to go above and beyond the requirements set by the DOL 
 

With the passing of 408(b)(2), plan sponsors will for the first time know what their third party administrator (TPA) and other vendors to their retirement plan have been keeping from them in revenue sharing or hidden fees. ACI has been an industry leader disclosing all fees and distributing revenue sharing to clients for some time now. ACI discloses indirect and direct compensation to its clients, returning 80% of revenue sharing to clients, keeping 20% only to offset the cost of the accounting required to distribute the monies.
 
As a “responsible plan fiduciary” you must ensure that you review and understand all vendors’ contracts raising any questions you may have to them. Vendors are required to send you a 408(b)(2) compliant agreement contract which among various other things must:


1. Clearly describe the services provided to you


2. State all fees charged to the plan sponsor


3. Disclose any direct and indirect fees received


Click here for a link to the Spring Issue of The ASPPA Journal for more information on what you should find in your service agreement from your Third Party Administrator.

ACI has been certified with CEFEX for the last 3 years and currently holds the Service Provider Seal mentioned in the article. As a responsible fiduciary, working with a certified TPA makes sense. You can rest assured that your agreement goes above and beyond the DOL’s requirements and that your plan will not become disqualified. Contact us to find out more information or to have an in-depth review of your plan.

ACI "Boot Camp" keeps your retirement skills sharp

By Yariel Chiong

Just in time to get your retirement skills fit for summer ACI is holding its May seminar “Boot camps.” Our next seminars will be on Wednesday, May 18th at our Torrance office. Don’t miss out on these very popular seminars, seating is limited. To sign up contact Yariel Chiong @ Yariel.Chiong@acibenefits.com to register. CPE credit is available.

ACI regularly holds both “Annual Plan Basics” and “401(k) Plan Basics” seminars in 1 action packed day. Here attendees will find out about the newest IRS and Federal regulations, hot water issues which can disqualify their plan or lead to costly corrections and a behind the scenes look at what exactly a Third Party Administrator (TPA) does every day for your plan or client.

These seminars are led by 2 of our top “Drill” instructors with a combined 36 years of experience in the industry. You are guaranteed to leave these seminars with a better understanding of how annual plan administration and 401(k) plans work. Previous attendees or “recruits” have had great things to say about the seminars, “The presentations and material were given at a very good pace. The real-life examples used based on the years of experience in 401(k) plans were entertaining and very beneficial in explaining key points.”

Contact Yariel Chiong @ Yariel.Chiong@acibenefits.com to register. Be sure to include the date of the seminar, name, company, title and email address.

For additional information visit our website at http://www.acibenefits.com/sections/library/speeches-and-seminars.html