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Compliance Testing

Benefit:

  • Helps meet IRS and ERISA regulatory requirements and help avoid potential penalties or even loss of the plan's tax-exempt status
  • Compliance testing is automatically included as part of retirement plan recordkeeping through AGH Employer Solutions
  • Provides an annual opportunity to identify and find solutions to rectify any issues before they become more expensive to fix
  • Fulfills the organization's fiduciary responsibilities and help mitigate potential liability

Who's most likely to benefit:

  • Any organization with an ERISA qualified retirement plan (401(k), profit sharing, ESOP, or 403(b))

Description:

Organizations that offer retirement plans are required to undergo several types of compliance testing at least once a year. These tests ensure that the retirement plan doesn't provide a disproportionate benefit to certain types of high-level executives and owners, called Highly Compensated Employees or HCEs, and that the plan covers the number of employees of the company required by IRS code. The battery of tests includes two types called non-discrimination testing and top-heavy testing. Discrimination testing measures the level of contributions HCEs and non-HCEs are making to their retirement plans. Top-heavy testing evaluates whether "key employees" assets in the plan exceed a percentage of total assets in the plan.

AGH Employer Solutions' retirement plan recordkeeping delivers not only knowledgeable and responsive service to plan sponsors and participants, but also the convenience of handling compliance testing and 5500 filing for our clients as well. By having the plan recordkeeper also handle compliance and 5500 filing, organizations ensure that both critical requirements are taken care of by individuals already familiar with your organization and plan, thus reducing the staff time and resources required from your company to comply with the mandatory testing.

If the organization fails any of the testing, our employee benefit plan advisors can work with you to develop a plan to get back into and maintain compliance in the way that best meets the organization's needs.