ADMIN Partners has talked a lot about Universal Availability (UA) and Meaningful Notice here on the blog. We have shared what UA is and how employers can ensure they meet the requirements for their retirement plan. With that in mind, we want to steer the conversation surrounding UA and expand on why it is so important. We also want to share some insight on what can happen when Plans fail to provide their employees with Meaningful Notice.
Let’s kick things off with a story that shares a real-life scenario where UA gravely impacted a Plan.
Years ago, ADMIN Partners was in talks with a school district who was considering ADMIN as their Plan’s third party administrator. As with most public schools, budgets were tight which left school officials in a bind when it came to spending on their Plan’s administration. The school was small and officials determined that they were unlikely to fall under the microscope of the IRS. Therefore, instead of spending money on ADMIN’s services, they made the decision to self-administer their Plan going forward.
After a handful of years, ADMIN received a call from the Plan Sponsor of the school district. They had received a notice from the IRS advising them of a scheduled IRS audit on their 403(b) Plan. The auditor who conducted the review had failed them on Universal Availability for not providing Meaningful Notice to their employees. The Plan was ultimately fined a penalty that was more than 20 times the amount ADMIN had quoted them for our TPA services only a few years prior. While ADMIN was unable to assist in the audit as we were not the TPA for the plan year in question, the District did end up retaining ADMIN Partners after the audit was completed.
This story is one of many as there are hundreds of retirement plans that experience an IRS audit each year. These audits are conducted regardless of the plan’s size or investment totals; the IRS is always watching. Audit failures almost always end in fines and/or penalties and can cost the employer hundreds, if not, thousands of dollars. For this reason, retirement plans are starting to rely on TPA firms (like ADMIN) to help them meet the UA requirements for their plans. ADMIN Partners helps our Sponsors by sending reminder notification throughout the year along with templates that they can use when distributing Meaningful Notice to their employees. And while TPA’s can support Sponsors in their efforts to meet the UA guidelines, it is ultimately up to the Sponsor to disburse the Meaningful Notice.
Want to learn more? Contact ADMIN Partners to learn more about how we help our Plan Sponsors with Universal Availability and Meaningful Notice.