Winter 2025

Spring Cleaning

Spring will arrive soon, promising new growth and a fresh beginning. It could also be the perfecttime to do some spring cleaning for your plan. Let’s look at some areas that you might considerreviewing to ensure your retirement plan is operating efficiently.

Document your processes and procedures to make certain that plan tasks can be handled incase of any absences during an enrollment or pay period. Having a backup in place can preventerrors and delays that could lead to penalties.

Make sure to have a process in place to notify all new enrollments of their eligibility, regardlessof whether the plan has automatic enrollment. Depending on the timing for plan entry, includingthe plan enrollment paperwork with the new hire paperwork could make entry easier for you.Please reach out with any questions regarding when an employee enters the plan.

Deposits of employee deferrals and loan repayments must be submitted to the plan as soonas possible to avoid penalties and corrections. For plans with less than 100 participants, a safeharbor rule allows deposits to be made within seven business days. For larger plans, theexpectation is that the money will be deposited more quickly. Depositing these funds on the paydate will avoid the possibility of being late.

Monitoring deferral contribution limits during the calendar year will avoid refunds after yearend. Make sure that your payroll is set up to stop deferrals once the limit is reached, including anycatch-up contributions for those who have reached age 50.

To keep the plan in compliance, employer contributions must be deposited timely. Due datesare impacted by the type of contributions, required status and tax deductibility. If you havequestions on when to deposit your employer contribution or even whether to make an employercontribution, please contact us.

Most plans must be covered by a fidelity bond. The minimum coverage is 10% of plan assets(rounded up to the next $1,000) and the maximum coverage is $500,000. Additional requirementsapply to plans with employer securities or non-publicly traded assets. If your fidelity bond isinsufficient, now is the time to raise the coverage. Inflation clauses that increase the bond amountas the plan assets increase can ensure that your bond coverage is always adequate. Contact us oryour insurance provider if you don’t have a fidelity bond.

Cybersecurity & ERISA Compliance: Protecting Your Plan

Cybersecurity has become a necessary consideration in many aspects of life, and your retirementplan is no exception. For plan sponsors, understanding your responsibilities—as well as those ofthe third party administrators (TPAs) and recordkeepers that you work with—is a fundamental partof ERISA (Employee Retirement Income Security Act) compliance and the fulfillment of yourfiduciary responsibilities. Retirement plans hold significant financial assets and large volumes ofhighly sensitive participant data, making them an attractive target for cybercriminals. As a result,the protection of this data and access to it has become inseparable from the obligation to actprudently and in the best interests of participants.

Why Cybersecurity Matters

Under ERISA, fiduciaries are required to act with care, prudence and diligence when administeringa plan and safeguarding its assets. In today’s environment, plan assets include not only the moneyheld in trust, but also the systems, data and processes that control access to those assets. Cyberincidents such as account takeovers, fraudulent distributions and data breaches can directly harmparticipants and may be viewed as a failure of fiduciary prudence. The DOL (Department of Labor)has reinforced that managing cybersecurity risk is now an expected part of plan governance—notan optional enhancement. A failure to consider known and growing cyber risk can expose plansponsors to regulatory scrutiny, participant claims and reputational damage.

Your Role in Cybersecurity

For plan sponsors, cybersecurity is closely tied to the duty to prudently select and monitor serviceproviders. Sponsors are expected to understand how TPAs and recordkeepers protect participantdata, prevent fraud and respond to incidents; evaluating these practices has become just asimportant as reviewing fees, services and operational capabilities. Let’s look at what role each hasin protecting your plan:

• TPAs play a critical role in the administration of your plan and routinely handle sensitiveparticipant information and transactional data. As such, we are expected to maintain strong internal controls, secure workflows and documented policies designed to protect plan operations from cyber threats.

• Recordkeepers are often the primary point of interaction for participants and therefore sit inthe front line of cybersecurity risk. For them, secure participant access, identity verification,transaction monitoring and distribution controls are essential to protecting retirement savings.

Bottom Line

The Department of Labor’s cybersecurity guidance underscores the expectation that plans andtheir service providers will maintain formal security programs, protect data through appropriatecontrols, prepare for incidents and clearly communicate with participants. To see the DOL’sCybersecurity Program Best Practices, please visit the URL provided at the end of this article.Following these principles help demonstrate procedural prudence and supports compliance withERISA’s fiduciary standards.

Ultimately, effective cybersecurity protects participants, strengthens trust in the plan, and reducesfiduciary and operational risk. In the current regulatory and litigation environment, soundcybersecurity practices are a clear reflection of prudent plan management. As your TPA, we takedigital security seriously, and we are fully committed to protecting your plan and participants andgiving you one less thing worry about.

Source: Department of Labor | Cybersecurity Program Best Practices:

https://www.dol.gov/agencies/ebsa/key-topics/retirement-benefits/cybersecurity/best-practices

The Plan Document: Why Understanding it Matters

An employer-sponsored retirement plan is an extremely valuable benefit a company can offer itsemployees. At the heart of this benefit is the plan document—the official rulebook that explainsexactly how the plan works. For plan sponsors, understanding this document isn’t just helpful; it’sessential. Here’s why:

It keeps the plan compliant.

The plan document spells out the rules that make the plan comply with government laws andregulations. These rules cover everything from eligibility requirements to contribution limits anddistribution options. If the company doesn’t follow these rules, it could face serious consequences,such as fines, audits or even the loss of the plan’s tax advantages. By knowing what the documentsays, plan sponsors can make sure the plan stays in compliance and avoid costly mistakes.

It helps you run the plan.

The plan document provides clear instructions on how the plan should operate day-to-day. Itexplains who can enter the plan, when they can enroll, how contributions are calculated, and whenemployees can withdraw their account balance. If these rules aren’t followed, errors can occur—such as enrolling someone too early or miscalculating contributions. Such mistakes can beexpensive and time-consuming to fix. Understanding the document helps sponsors keep their planrunning smoothly.

It protects employees and the plan sponsor.

Plan sponsors have a fiduciary responsibility, which means they are obligated to act in the bestinterest of employees. Knowing the plan’s provisions ensures that decisions about investments,distributions, and other plan features are made fairly. This not only protects employees’ retirementsavings but also helps the company avoid potential legal challenges.

It makes changes easier.

Laws and company policies evolve over time, and retirement plans often need to be updated toreflect changes. If plan sponsors understand the current plan provisions, they are better equippedto make updates more efficiently and avoid creating conflicts or gaps in the rules. This proactiveapproach keeps the plan flexible while remaining compliant.

It improves communication.

Employees will have questions about their retirement benefits. When can they start contributing?When are they eligible for a distribution? Plan sponsors who understand the plan document canprovide clear, accurate answers. This builds trust and helps increase employee confidence in theirretirement planning.

As you can see, the plan document isn’t just paperwork—it’s the foundation of the retirement plan.For plan sponsors, understanding the plan document means staying compliant, avoiding costlyerrors, protecting employees, and ensuring smooth operations. As your TPA, we’re here to helpyou build this foundation and maintain a successful benefit for you and your staff.

Understanding RMDs: What Plan Sponsors Need to Know

As a plan sponsor, it’s critical to understand the rules surrounding Required Minimum Distributions(RMDs) because they directly impact compliance, participant education and operational processes.RMDs are mandatory withdrawals from qualified retirement accounts, and failure to handle themcorrectly can lead to penalties for participants and fiduciary risks for your plan.

In general, participants who turned age 73 in 2025 are mandated to take their first RMD fromqualified retirement plans. This requirement stems from the SECURE Act 2.0, which raised theRMD age from 72 to 73 starting in 2023. For employees born in 1960 or later, the RMD age willincrease to 75 in future years. Awareness of the shifts in these age thresholds is necessary foridentifying which participants are affected in any given year. Please note that distributions from anIRA will not satisfy the requirement for an RMD from a qualified plan.

For qualified retirement plans, if the plan document allows it, most active employees have theoption to delay RMDs until they retire. However, a 5% owner of the business must begindistributions at the appropriate age regardless of employment status. Plan sponsors should ensurethese distinctions are clear. The 5% ownership threshold includes ownership attributed from otherfamily members.

Your role is to make sure the plan complies with IRS rules. In terms of RMDs, your responsibilitieswill include:

• Identifying affected participants: Work with us to flag employees who have reached RMDage, as well as any 5% owners who haven’t retired.
• Monitoring distributions: Confirm that you have methods in place for tracking andprocessing RMDs to avoid errors.
• Communicating deadlines and amounts: Provide clear instructions to participants aboutwhen and how much they need to withdraw.

The timing of RMDs is critical. Missing these deadlines can trigger penalties:

• A participant’s first RMD is due by April 1 of the year after reaching RMD age.

• Subsequent RMDs must be completed by December 31 each year, creating the possibilityof two distributions in the first year.

The RMD amount is calculated based on the prior year-end account balance divided by a lifeexpectancy factor set by the IRS. Plan sponsors don’t calculate these amounts directly, but theyshould understand the process to answer participant questions and verify accuracy.

Failing to take an RMD can result in a 25% excise tax on the amount that isn’t withdrawn. Forplan sponsors, improper handling of RMDs can lead to fiduciary concerns and potential IRSscrutiny.

While RMDs are technically a participant responsibility, they also represent a compliance obligationfor your plan. By proactively identifying affected employees, confirming administrative processes,and communicating clearly, you reduce risk and support participants in meeting their distributionrequirements.