As part of Marsh & McLennan Agency formerly Benefits Resource Groups (Marsh & McLennan Agency formerly Benefits Resource Group) annual service, our consultants review compliance testing performed by the vendor. Our objective is to thoroughly analyze the test, uncover and correct any errors, and minimize refunds to the Highly Compensated Employees (HCE’s).
HCE’s were not able to maximize their retirement savings due to compliance testing failure. The failed tests resulted in refunds of 401(k) deferrals (plus investment gains) which then become taxable income to the participant.
Marsh & McLennan Agency formerly Benefits Resource Group provided compliance test review services to four clients. The summary below is reflective of the reviews whereby Marsh & McLennan Agency formerly Benefits Resource Group was able to improve the test results (regardless of pass or failed results), thereby reducing or eliminating a refund.
|Vendor Original Test Result||Marsh & McLennan Agency formerly Benefits Resource Group Revised Test Result||Savings to HCE’s||# of HCE’s Impacted||Vendor|
|Client 3||Failed||Failed||$1,284||8||Merrill Lynch|
- Marsh & McLennan Agency formerly Benefits Resource Group was instrumental in educating the plan sponsor about various testing methods that are permitted under the regulations that providers do not automatically use unless instructed.
- Never assume the test results are final until a thorough review of the test and data have been performed by a qualified person.
- Marsh & McLennan Agency formerly Benefits Resource Group prevented costly tax ramifications and excise tax penalties in the event the plan was audited by the IRS.
- Compliance test refunds reduce the amount that can be saved for retirement and have an impact on personal tax returns therefore Marsh & McLennan Agency formerly Benefits Resource Group was successful in helping our client’s employee’s save for retirement.
The case studies referenced above do not involve the provisions of investment advisory services. Cost savings cannot be attained through our efforts for all our clients.