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Payroll & Eligibility

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109 Late Payrolls

An audit-sized client hired a payroll firm to remit their payrolls to the vendor each payroll period. This client had several locations and weekly payroll. During the plan audit, it was discovered that the payroll firm did not remit the contributions timely to the vendor. RPCSI addressed the late deferrals for the plan year being audited, as well as the current plan year. Ultimately, this totaled to 109 late payrolls. Through RPCSI's recommendation, the client filed through VFCP and received a No-Action Letter. A payroll error can be a client's worst nightmare. We work diligently to provide timely and trustworthy guidance and to walk our client's through overwhelming errors like this one.

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Failure to Enroll

Recently, one of our clients experienced trouble due to failure to enroll. The payroll contact, who is neither the primary or secondary plan contact, did not realize that the company was expecting her to let employees know when they were eligible for the plan and to provide them with a summary plan description, enrollment materials, Safe Harbor notice

and participant fee disclosure. RPCSI coordinated a conference call with all parties, including the adviser, client, vendor contact, and an RPCSI Consultant to discuss the plan's eligibility and entry dates. Our consultant explained when employees need to be offered the plan, what materials to provide them and how to enroll them. RPCSI offered to calculate the missed deferrals, Safe Harbor matching contributions, and lost earnings on the missed contributions. We helped our clients close the communication gap and get back on track with minimal disruption to the plan and company operations.

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The Wrong W2

During the reconciliation of deposits for one of our clients, we discovered differences. After reaching out to the client, he was able to discern that the payroll company had not only provided him the wrong annual data but had actually issued one Highly-Compensated Employee the wrong W2. Because we caught this error quickly, they were able to issue him a revised W2 prior to the IRS deadline for employer reporting.

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Create Written Controls

One of our consultants was contacted by a client who was very upset upon discovering that, after an employee had terminated employment, no one had told their replacement that they were responsible for notifying employees when they became eligible for the plan and for enrolling new employees into the plan. The next plan entry date had passed by the time this was discovered. She was able to assure her client that these types of operational errors do happen and that we would be able to assist them with the correction utilizing the correction methods outlined under EPCRS. She also recommended that they create written controls within their organization so that they have clear written instructions of when employees are to be notified that they are eligible for the plan and given the proper plan-related materials and assistance with the enrollment process. Having clear written controls is extremely important in ensuring that the plan rules are being followed. 

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Re-Hired Employees

We often get calls from clients who have re-hired an employee and are wondering when they are eligible to participate in the plan. It is important to note that, in most cases, service with an employer cannot be disregarded. An employee who met the requirements to participate in the plan in a prior employment period is almost always eligible to participate in the plan upon their date of re-hire. We always advise our clients to contact us if they have questions about the eligibility of a re-hired employee as there may be limited exceptions written into the plan document that would affect their immediate eligibility for the plan.  

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Quick Fix

One of our clients reached out to us one December panicking because he knew the company had gone over their 402(g) contribution limit. The assigned consultant worked immediately to guide the client in the correction of 402(g) excess contributions before the plan year-end work began. Knowing what to do and taking action quickly prevented this problem from worsening for our client.

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