Spectrum Resource Center

Plan Review Triggers: Why TPAs Should Care

April 9, 2026 By Kate Bartolome Newsletter

In 401(k) administration, a plan review is often most valuable when the employer’s business changes, even if the plan document itself has not. A plan that worked well last year can drift out of alignment when ownership, payroll, compensation, or workforce patterns shift. Periodic reviews help TPAs catch issues before they become failed testing, correction projects, or participant problems.

A Few Triggers to Consider:
Ownership changes. New owners, equity grants, family ownership changes, and entity-level changes are great reasons for a plan review. For example:

Ownership and entity changes can affect who is an HCE or key employee. Ownership attribution rules make this easy to miss without a plan review.
When corporate structures change, controlled group or affiliated service group rules may require related employers to be considered together. That can affect coverage, limits, and testing, and may require looking at more than one plan at the same time.
Mergers, acquisitions, and divestitures are classic review triggers, often affecting both the employee census and the group of related employers. Transition rules can help with testing, but only if understood and properly applied.

Significant pay changes. Deferrals, match, and other plan contributions and allocations must follow the plan’s compensation definition, but often new bonuses, commissions, or other new
types of compensation are added without being coded as plan compensation. This can create definition of compensation mistakes and change testing outcomes.

Hiring shifts. Plan errors are easy to make in times of rapid growth, high turnover, and when moving from owner-only coverage to covering a broader workforce.

Payroll or administration changes. A new payroll vendor, separate payrolls by entity, new pay codes, or process changes are strong reasons to review how a plan is actually being administered.

Why TPAs Should Care:
Failure to follow plan terms, definition of compensation mistakes, matching contribution errors, and failed ADP/ACP testing are common 401(k) problems, often caused by missing changes in company structure or operations. A timely plan review can catch these issues while they are still small, often before year-end testing, corrections, or participant complaints force the issue.

How TPAs Can Help:
TPAs can build plan-review triggers into annual questionnaires and mid-year check-ins. For example, ask whether there were ownership changes, new entities, acquisitions, payroll changes, unusual bonus programs, or major workforce shifts. If the answer is yes, compare plan terms to actual operations, confirm the compensation definition is being applied properly, and revisit whether the current plan design still fits the client’s workforce and goals. Your proactive review process can help clients avoid avoidable compliance problems and keep the plan working as intended.

Reminders:

May 15: Quarterly benefit statements for participant-directed individual account plans are generally furnished by this date for the quarter ended March 31.
May 15: For participant-directed individual account plans subject to ERISA §404a-5, quarterly statements of actual administrative and individual charges to participant accounts, with related service descriptions, must be furnished at least quarterly and are often provided with the quarterly benefit statement.

Jesse St. Cyr, Partner, Poyner Spruill
Jesse is a member of the Employee Benefits and Executive Compensation team at Poyner Spruill LLP. He represents clients before the IRS and DOL in matters involving employee benefits. Jesse has experience working with a diverse range of benefits and compensation matters and has extensive experience working with a variety of employers. Jesse is recognized by Chambers USA as a leading lawyer for Business (Employee Benefits & Executive Compensation).