Plan sponsors sometimes assume their retirement plan providers somehow know everything that is happening inside their company.
They don’t.
Your TPA, recordkeeper, adviser, and attorney only know what you tell them.
That becomes a problem when something important changes and nobody thinks to mention it.
Maybe you bought another company. Maybe an owner sold part of their interest. Maybe you created a new entity. Maybe employees are now being paid through a different company. Maybe you started using leased employees. Maybe you changed payroll systems or compensation practices.
Those facts can have a major impact on a retirement plan.
Ownership changes can create or eliminate controlled groups. Relationships between businesses can create affiliated service groups. Acquisitions can affect coverage testing, eligibility, plan mergers, and transition rules. A payroll change can affect compensation, deferrals, and employer contributions.
Yet providers often learn about these changes months later.
Sometimes they find out during year-end testing. Sometimes during an audit. Sometimes after a participant complains. By then, the correction may be far more complicated than it needed to be.
Plan sponsors should make it a habit to contact their retirement plan providers whenever there is a meaningful business change.
Do not assume someone else told them.
Do not assume your payroll company told them.
Do not assume they will somehow notice.
Retirement plans operate based on information, and incomplete information creates mistakes.
Your providers cannot advise you about something they do not know happened.
One of the easiest ways to avoid retirement plan problems is also one of the simplest: keep your providers informed.