Managing Risk: Compliance Reviews
Our compliance reviews are made up of three distinct parts, an operational review, a document review, and a financial review.
Operational reviews provide sponsors analysis and resolution of possible tax risk or compliance exposure if the plan were audited by a regulatory agency or challenged by a participant involving a benefit claim. The project is customized to the plan sponsor’s needs and areas of greatest concern. The project can encompass review of all of some of the following:
- Plan document and SPD
- Benefit calculations
- Participant notices, disclosures, and statements
- Processing of distributions
- Administration manuals
- Participant service determination for eligibility, vesting, and benefits
- Census data and processing
Any errors found in the operational review can be corrected with assistance from legal counsel and we will recommend relevant changes in processes to reduce the potential for future errors.
With the recent IRS decision to limit its determination letter program, plan sponsors may want legal reviews of their plan documents to ensure continued compliance with tax laws and regulations. This can include a review of the plan document, the SPD, or other documentation. Whether there is a question about appropriate actuarial equivalence, the application of the accrued benefit formula or some other technical aspect of the document, the experts at October Three can assist the legal team in conducting a thorough review.
To broaden the risk management objectives of a compliance review, the plan sponsor may wish to include an independent review of key financial risks. That review may be augmented by considering potential future risk scenarios, including projections of future contributions and funded status under alternative outcomes and contribution policies.
This can be especially important right after acquiring a plan so that you can resolve any compliance issues right away while ensuring that you are properly controlling all of the plan’s risks.