Tips for Reviewing your Employee Benefit Plan

January 2018 | Posted in Employee Benefit Plans, Whitley Penn
Employee Benefit Plans, Whitley Penn
Tips for Reviewing your Employee Benefit Plan

Whether or not your employee benefit plan (“EBP”) has an annual audit, it is your fiduciary responsibility as a plan sponsor to monitor and review the plan. A regular annual review of the Plan and its provisions can help reduce errors, misunderstandings, instances of noncompliance, and breaches of fiduciary duties.

A 2014 study by AllianceBernstein of plan sponsors found that at least one-third of respondents, especially those with less than $1 million in assets, were unaware of their fiduciary roles and were not regularly reviewing their plans. Per the DOL, anyone who holds any authority or responsibility for the plan and its operations is subject to fiduciary responsibilities such as a plan trustee, plan administrator, and members of a plan’s investment committee. A fiduciary must act prudently, follow the plan document, and is responsible for operating the plan solely in the interest of participants and beneficiaries. Any fiduciary found to not act in the best interest of plan participants can be found personally liable to restore any losses suffered by the plan.

So what should you do each year to review your plan?

  • Review plan documents – there are two important plan documents to inspect each year: the retirement plan document (“RPD”) and the summary plan description (“SPD”). The RPD includes all plan provisions such as participant eligibility, definition of compensation, disbursement options, and allowable contributions. The SPD includes all of the RPD information but is written in a more easily understood language. The RPD and SPD must be updated to reflect any changes in employer provisions and mandatory legislative updates.
  • Evaluate investments and employee data – the accuracy of employee information such as date of birth, date of hire, compensation, and deferral elections is important as errors can affect the participant’s benefits. Investment performance should be monitored regularly, but at a minimum annually, to ensure it is in compliance with ERISA and IRS requirements.
  • Review plan’s application and definition of compensation – there is no standard formula to define compensation for an EBP. A plan may have varying definitions of compensation to ensure compliance with nondiscrimination requirements or to identify which payroll items must be included to calculate retirement benefits. Employers can exclude items such as bonuses, commissions, overtime pay, stock option pay, fringe benefits, and the like. Plan sponsors should review the payroll system to ensure all eligible pay types are properly included to calculate employee and employer contributions.
  • Employee review – plan sponsors should encourage all participants to review his/her investment choices, contact information, demographic data, and beneficiaries. Oftentimes, a participant moves, changes jobs, or has a major life event and fails to update his/her retirement account. Out of date information makes it harder for a plan sponsor to contact the participant to inform them of their benefits.

The aforementioned items are a good start in ensuring your plan is operating in accordance with plan provisions, identify errors so they can be fixed timely, and help prepare for an audit. For a more detailed review, you can also use IRS checklists with links to Fix-It Guides.


AllianceBernstein Study:

IRS Checklists:

IRS Fix It Guide:


About Whitley Penn Contact Whitley Penn

Whitley Penn continues to be one of the region’s most distinguished public accounting firms. With a strong base in Texas and a worldwide network affiliation via Nexia International, the firm is strategically positioned for continued growth both locally and internationally. Whitley Penn has been consistently recognized as “One of the Top 100 Firms in the U.S.” and “Best of the Best” by INSIDE Public Accounting. For more information on Whitley Penn, please visit

Contact Us

To contact Whitley Penn with any questions or for more information, please fill out the form.

  • All Fields Required
  • This field is for validation purposes and should be left unchanged.


 Join the Team Small Screens Contact Us Small Screens Join the Team Large Screens Contact Us Desktop Large Screens