As today’s electronic record keeping and processing environment
continues to evolve, the evidence to support certain employee benefit plan transactions
is often falling by the wayside.In fact,
many Plan Sponsors rely on their third-party administrator (“TPA”) for
maintaining documentation through the TPA’s website (i.e. enrollment forms,
loan requests, distributions requests, etc). However, recent guidance issued by the IRS
cautions that it is the plan sponsor and not the TPA or participant who is
responsible for maintaining documentation sufficient to prove that such transactions
comply with the law particularly with respect to loans and hardship
This evidence may include but is not limited to loan
applications, executed promissory notes, proof of utilization for primary
residence if applicable, collection efforts in the event of a default and
These types of transactions result in additional supporting
documentation which should be maintained in employee files once approved by the
Plan Administrator. A failure to
maintain this information may be considered a qualification failure under the
EPCRS and should be corrected.
If you are a Plan Sponsor that would like schedule a review
of your current files for compliance or if you have any other employee benefit
plan related matters that you would like to discuss, please contact Quinn R.
Martin or MaryPat Davitz.
Employee Benefit Plan Downloads: