Bradley Partner David Joffe Quoted in PlanAdvisor on Common Retirement Plan Testing Mistakes

Bradley partner David Joffe was quoted in PlanAdvisor on the most common retirement plan testing mistakes. Retirement plan advisers can help their clients by understanding IRS plan testing and helping them avoid frequent mistakes.

“The most common mistake I see in plan administration testing is following the definition of compensation,” said Joffe.

“It is helpful if an adviser goes through that definition word for word, in terms of each element of compensation,” he explained. “Companies have different ways of defining compensation and coding it. It is also helpful to get a person from the payroll provider involved.

“Next is eligibility and ensuring that those who are eligible to participate in the plan are, in fact, given that access,” Joffe continued. “That can include automatic enrollment, or not automatically enrolling participants when they should be. Enrolling appropriately according to the plan document is very important. Employers need to understand how eligibility terms work.”

Another common error, he said, is applying the IRS required limits on contributions. “Sponsors need to know those limits, particularly as they change annually,” he noted.

Sponsors sometimes can find through plan testing that they’re not properly administering hardship withdrawals and loans from the plan, Joffe said, and they should watch out for that

If a mistake is uncovered by IRS plan testing, advisers can help plan sponsors use the IRS’ Employee Plans Compliance Resolution System (EPCRS) to rectify it, he added.

The original article, "The Most Common Retirement Plan Testing Mistakes," appeared in PlanAdvisor on April 12, 2021.