Our Blog
5 Common Recordkeeping Mistakes and How to Avoid Them
March 1, 2025
Keeping your retirement plan records up-to-date is critical for ensuring compliance, avoiding penalties, and maintaining employee trust. For business owners managing retirement plans, understanding when and why to update records can
save time, reduce risks, and streamline operations. In this guide, we’ll cover the key moments when you should review and update your retirement plan records and provide actionable tips for keeping your plan compliant and accurate.
Why Accurate Retirement Plan Records Are Essential
Accurate recordkeeping is the backbone of a well-managed retirement plan. It ensures compliance with IRS, DOL, and ERISA requirements while providing transparency to employees. Incomplete or outdated records can lead to serious issues,
including:
- Non-compliance penalties: Errors in reporting can result in fines or audits.
- Employee dissatisfaction: Incorrect or outdated benefit statements can erode trust.
- Operational inefficiencies: Outdated records can make routine tasks, such as eligibility calculations and contributions tracking, more time-consuming.
By updating your records regularly, you protect your business and create a stronger foundation for employee benefits.
Why Accurate Retirement Plan Records Are Essential
To ensure accuracy and compliance, it’s important to know when to review and update your plan records. Below are the critical times to prioritize updates:
Each new hire must be accurately added to your retirement plan records to track eligibility and enrollment dates. Missing or incorrect information can result in compliance issues or delays in participation.
Pro Tip: Establish a process to update records immediately after onboarding new employees to keep your data current.
Employee status changes, such as moving from part-time to full-time, taking a leave of absence, or returning from leave, can impact eligibility and contributions. Records should be updated promptly to reflect these changes.
Pro Tip: Schedule a regular review of status changes with your HR team to avoid missed updates.
Annual nondiscrimination testing ensures your retirement plan does not unfairly favor highly compensated employees. Accurate records are essential for passing these tests.
Pro Tip: Review participant data, including contributions, compensation, and eligibility, before the testing period begins.
Form 5500 is an annual filing required for retirement plans to report their financial condition, operations, and compliance status. Inaccurate or outdated records can lead to filing errors and penalties.
Pro Tip: Audit your records for completeness and accuracy well in advance of the filing deadline to address any discrepancies.
Accurate records are essential when processing participant loans or distributions to ensure compliance with plan rules and federal regulations.
Pro Tip: Confirm all participant data, such as vesting schedules and account balances, before approving any loan or distribution requests.
Events such as mergers, acquisitions, or plan amendments require significant updates to your records. These changes often involve adjusting participant data, contributions, or plan provisions.
Pro Tip: Work with a third-party administrator (TPA) to manage updates during business transitions for seamless compliance.
Annual plan reviews are a great opportunity to update all records, including participant information, contributions, and eligibility, to ensure compliance and prepare for the upcoming year.
Pro Tip: Incorporate record reviews into your year-end checklist to stay proactive about updates.
Tips for Streamlining Recordkeeping Updates
Keeping records current doesn’t have to be overwhelming. With a few best practices, you can make the process more efficient:
Set Regular Checkpoints: Schedule quarterly or monthly reviews to address updates incrementally, rather than waiting for annual reviews.
Partner with a TPA: Third-party administrators, like 3G Retirement Services, specialize in managing updates and ensuring compliance, saving you time and reducing stress.
Leverage Secure Portals: Provide employees with access to secure portals where they can review and update their own information, minimizing administrative workload.
How 3G Retirement Services Can Help
At 3G Retirement Services, we specialize in retirement plan recordkeeping and reporting, ensuring your records are accurate, compliant, and up to date. Our expert team handles everything from participant data tracking and compliance
testing to Form 5500 filings and loan processing.
With our support, you can avoid the risks of outdated records, save time, and focus on running your business. Let us take the stress out of recordkeeping so you can provide a secure and trustworthy retirement plan for your employees.
Ready to simplify your recordkeeping?
Schedule a consultation with 3G Retirement Services today and experience the benefits of accurate, efficient, and stress-free plan management.
