Articles | October 17, 2019

Why You Need an Administration Review

Administering a benefit plan is a complex task. It can be difficult to keep plan documents and procedures up-to-date.

A steady stream of changes to federal laws, including the Internal Revenue Code (IRC), the Age Discrimination in Employment Act (ADEA), the Uniformed Services Employment and Reemployment Rights Act (USERRA) and the Americans with Disabilities Act (ADA), adds to this complexity. Even when documents reflect current policies, some office staff may not follow the new procedures.

Any mismatches between your plan documents and plan procedures can lead to misunderstandings and inefficiency. They can also make the plan vulnerable to government penalties and participant litigation.

Increased enforcement efforts and plan audits by the Internal Revenue Service (IRS) and Department of Labor mean that it is more important than ever before to document plan procedures and keep them up-to-date.

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Why you need an administration review

CrosscheckSM is a benefit administration review program for governmental qualified retirement plans, Section 457 deferred compensation plans, Section 403(b) tax-sheltered annuities and health benefit plans.

This program helps fund administrators to:

  • Determine whether the plan complies with federal law requirements
  • Confirm that the plan procedures correspond to what the plan provides
  • Reduce expenses by identifying ways to streamline fund administration
  • Offer a refresher course and reference guide for the fund office staff
  • Demonstrate the plan sponsor's good-faith effort to comply with IRS rules.

 

The Crosscheck review process

Step 1: Assessing needs

The Crosscheck process starts with a discussion between the fund administrator, fund legal counsel and Segal compliance consultants to get a detailed picture of how the plan is administered. This helps to identify areas of particular concern and liability and determine how best to use Crosscheck. Based on the results of this discussion, Segal will work with your legal counsel to create a proposal and determine how results will be presented.

Step 2: Reviewing documents and administrative materials

Segal will review your plan documents, summary plan description and all related administrative materials, such as letters and notices to participants. This review forms the benchmark when looking at your plan's actual operations and plan procedures. The review addresses more than 25 topics, including government reporting requirements, fiduciary responsibilities and duties, claims and appeals procedures and rules governing eligibility and benefits.

Step 3: Reviewing administrative practices

In the next phase of Crosscheck, Segal interviews the individuals who are responsible for day-to-day plan operations. We conduct the interviews in a conversational and free-form manner, but structure our questions to make sure we cover the administrative and regulatory areas of most significance to your plan.

Step 4: Presenting the results

We present our findings and analysis in a Crosscheck report prepared with the assistance of your fund's legal counsel.

The report is tailored to your fund and, at your and legal counsel's option, may include:

  • An inventory of the documents that were examined
  • Summaries of interviews conducted
  • A detailed discussion of statutory and regulatory requirements
  • A review of what the plan document provides
  • An assessment of whether the day-to-day plan operations correspond with legal requirements and plan documents
  • Areas of administration that require attention
  • Our recommendations to legal counsel for resolving potential problems

Since the report is a detailed study of the plan document and operations, plan administrators may use it as a reference or staff training tool that can streamline plan administration, increase efficiency and reduce expenses while demonstrating a good-faith commitment to comply with federal regulations.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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