LANSING, Mich. – While most businesses and business owners have developed a healthy fear of IRS tax audits, the U.S. Department of Labor's (DOL) authority to audit 401(k) plans has not drawn the same attention. For the sake of your small business, and your personal finances, this lack of awareness of the DOL's 401(k) money grab must change immediately! This article seeks to sound the alarm on this immediate threat to small businesses and business owners, and proposes key strategic measures you can take to defend against a potentially disastrous DOL 401(k) audit.
1. Consult with an attorney experienced in handling 401(k) plan issues. As the old saying goes, an ounce of prevention is worth a pound of cure. Hiring an attorney to determine whether you are in compliance with applicable laws will allow you to identify issues, resolve problems before they turn into a full-blown DOL audit situation, and develop plans to ensure future compliance.
2. Work with a qualified 401(k) advisor to explore alternatives to utilizing a payroll company to administer your small business 401(k) plan. These alternatives can include identifying fiduciary administration services that: (i) are dedicated to properly managing plans; (ii) provide required informational resources to employees; and (iii) will insure small businesses and owners against any penalties imposed by DOL audits.
3. Provide a reasonable outlet for employee questions and/or complaints regarding 401(k) plans, and resources to empower employees to participate in growing their retirement income. These reduce the most frequent trigger of a DOL audit - an employee complaint caused by uncertainty or a feeling of financial powerlessness.