Most Retirement Plans Are Breaking Labor Department Rules, And The Fines Are Enormous
- Created: Wednesday, 22 February 2012 09:45
A full 70% of all plans that got audits in 2009 and 2010 were in noncompliance, earning an average of $450,000 apiece in fines.
In all, DOL recovered a staggering $1 billion in 2010 alone.
Most of the problems stem from bookkeeping errors and other oversights -- only 96 people associated with retirement plan offenses were charged on a criminal level in 2010 -- but these are exactly the types of error that third-party administrators make their money preventing.
Frequent mistakes the DOL auditors see: sluggish deposits, missed filing deadlines, failure to meet rank-and-file employee participation thresholds, and even outright mismatches between business and plan structure.
Plan lending remains a sore spot as well, but everyone in the industry recognizes that this is an area that most plan personnel find confusing.
Nonetheless, these are all preventable problems, and advisors who can prevent them can save the plans they work with a great deal of money -- not to mention market themselves as such.
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