In providing guidelines for Plan Sponsors, the Internal Revenue Service makes it clear, even if you, as a Plan Sponsor, use a third party administrator (TPA) to handle participant transactions, you are ultimately still responsible for the proper administration of that retirement plan. Make sure you stay on top of all recordkeeping requirements.
Recordkeeping for Plan Sponsors
1. Keep documentation for hardship distributions
The Plan Sponsor must obtain and keep hardship distribution records. It is never enough that a plan participant might keep his or her own records of hardship distributions or that a plan participant might self-certify that he or she has satisfied the criteria to receive a hardship distribution. Participants may leave employment or fail to keep copies of hardship documentation, making their records inaccessible in an IRS audit. Failure to have these records available for examination is a qualification failure that should be corrected using the Employee Plans Compliance Resolution System (EPCRS).
2. Keep documentation on plan loans
IRS audits have found that some plan administrators impermissibly allowed participants to self-certify their eligibility for plan loans.
You can download the full report, which lists the types of records you are responsible to maintain, here: It’s Up to Plan Sponsors
Or read the report online at: www.irs.gov/Retirement-Plans/Its-Up-to-Plan-Sponsors-to-Track-Loans-Hardship-Distributions.