I have a client who is a third-party administrator and it appears that a former employee put them in a bind by giving some truly awful advice to a client. The advice was that the plan sponsor could make a contribution for the plan year that was prior to the effective date of the plan. Yes, you read that right. Since I don’t have a DeLorean time machine, I’ve been working with them to fix what could be a major problem if ever detected on a government audit.
If you give your employees proper training, these kinds of catastrophic errors won’t be much of an issue. If you don’t, these errors will be a regular thing.
