Any payroll mistakes can be quite costly to employers — in the form of extra benefits, complaints, lawsuits, government-assessed fines and penalties, and attorney fees to name a few. Don’t learn the hard way what these mistakes are. Here are some of the most common employee benefits and payroll mistakes:
Employees are entitled to receive and make contributions based on the definition of compensation set forth in the plan document, up to applicable limits. Employers sometimes fail to compute profit-sharing contributions based on certain types of compensation (e.g., bonus payments, commissions and service awards), contrary to the plan language. Failure to comply with the terms of the plan can result in disqualification of the plan. To avoid plan disqualification, employers follow EPCRS correction principles and end up making the extra profit-sharing contributions, plus lost earnings, to make the employee plan accounts whole.