Definition of "Compensation" This section has a couple of significant issues. The first one involves an issue that is discussed in The Written Document section regarding not following the terms of the plan document. The one most common issue in this area is not using the plan definition of “compensation” when administering the plan. This definition plays a role in most everything an administrator needs to compute: determining contributions, employer matching contributions, and many other areas. Another area here involves not applying the correct amount for the matching contribution or not even making the match at all. Administrators need to be certain they know the definition of “compensation” in the plan and other plan provisions and apply them correctly. SIMPLE IRA Plans 401(k) Plans Voluntary Correction Exceeding Annual Dollar Limitations Another prevalent issue is exceeding the annual dollar limitations imposed by the Internal Revenue Code. Depending on the plan type, limitations need to be taken into affect for employer contributions, catch-up contributions, deferrals, etc. The administrator must also be aware of multiple plans of the employer and how the limitations apply. 403(b)/457 Plans 401(k) Plans SARSEPs Voluntary Correction Depositing of Contribution by Employer The next frequent issue in this area is the lateness (or forgetting to make) of the actual deposit of contributions by the employer. Salary deferrals and employer contributions are included here. When an employer deposits contributions late or forgets to make the contribution, problems arise. For one, some plans have a requirement that contributions be made every year. Failure to do so results in a funding deficiency which leads to the payment of an excise tax. Multiemployer Plans SIMPLE IRA Plans 401(k) Plans SARSEPs Vesting of Employer Contributions Trends are also found in the vesting, or ownership, of the employer contributions. There are instances when monies should be 100% vested to the employee, as when they turn age 65, but are not. Examinations of plans also indicate that wrong vesting determinations are being used in operation vs. the plan’s vesting schedule (another example of the issue discussed in The Written Document regarding not following the plan language). The trends in this area are found in larger plans (Multiemployer plans), but smaller plans also need to be cognizant of this trend (Defined Benefit Plans). 2% Employer Non-Elective Contribution Finally, SIMPLE IRA plan examinations have found a trend in which there is a failure to make the 2% employer non-elective contribution when elected in the plan.