As the sponsor of a company retirement plan, the organization you represent has many required tasks to complete each year. These include regular filings with the IRS, providing important notices to participants, and timely plan maintenance.
Many of the deadlines for these important tasks fall in the fourth quarter – which can be a hectic time for businesses. To ensure you don’t miss an important date, review the following year-end tasks and address them well in advance of the deadline.
December 1st: Provide Annual Safe Harbor and Automatic Enrollment Notices
If the plan is safe harbor, your benefits team must distribute an annual notice to all eligible participants which includes the plan details for the upcoming year. This notice must be delivered between 30 and 90 days before the start of the plan year. Therefore, December 1st is the last day to send it to participants.
Like safe harbor notices, the automatic enrollment notice must be delivered 30 – 90 days before the start of the plan year, so December 1st is also the last day to provide it. Automatic enrollment can encourage participation in your retirement plan, and companies that use this feature must notify participants each year. Your benefits team must also meet the December 1st deadline for distributing the required notice if you plan to add an automatic enrollment feature for the upcoming year.
December 15th: Deliver Summary Annual Report (Extended)
Each year, the company must file Form 5500 with the Department of Labor, which summarizes the plan, its financial condition, and investments. This information should also be made available to participants through the Summary Annual Report [SAR].
The SAR must be delivered to each participant no later than 2 months after the company files Form 5500. If the firm you represent used an extension for Form 5500 earlier in the year, the last day to provide the summary to participants is December 15th.
December 31st: Corrective Distributions, RMDs, Plan Changes
There are several tasks to complete by the last day of the year. These include processing corrective distributions, RMDs, and discretionary amendments to the plan document.
Corrective Actions
If the plan fails ADP or ACP testing, corrective action is generally required. This could involve returning some contributions to highly compensated participants or making additional contributions to other employees.
December 31st is the last day to process corrective distributions without risking the plan’s tax-qualified status. However, the organization may still owe a 10% excise tax. December 31st is also the deadline to correct failed testing with a qualified nonelective contribution if the plan uses current-year testing.
Processing RMDs
Employees older than a certain age must take annual withdrawals from their retirement accounts called Required Minimum Distributions [RMDs]. These withdrawals must leave their account by December 31st, so the benefits team must ensure the transactions are processed by this date to avoid penalties for participants.
Plan Document Amendments for Discretionary Changes
If the company you represent made discretionary changes during the year, your benefits team must amend plan documents. These changes must be made by the last day of the plan year – December 31st for calendar year plans.
SECURE Act 2.0 Changes to Implement Before the End of 2025
The SECURE Act 2.0 introduced new requirements for employer plan sponsors, and many of the changes should already be in place. However, a few tasks had longer implementation periods, and these should be addressed before the end of the 2025 tax year.
Mandatory Roth Treatment of Catch-Up Contributions for High Earners
The SECURE Act 2.0 requires employees with FICA wages over $145,000 – indexed for inflation – to designate any catch-up contributions as Roth in tax years starting after December 31, 2025. Employers still won’t have to offer catch-up contributions, but if your plan allows them, then you must make a Roth option available.
Paper Statements Required
You may also need to adjust processes to account for new paper statement requirements beginning in tax years after December 31, 2025. These rules require Defined Contribution plans to provide a paper statement at least once per year and Defined Benefit plans to provide one at least once every three years. Paper statements aren’t required for employees who proactively choose electronic statements. They are also not required for those who do not have an accurate mailing address on file, if the plan has taken reasonable steps to obtain one.
There are many other tasks that you need to complete on a regular basis to keep your plan running smoothly. Fortunately, you don’t have to tackle them alone. An experienced team of financial professionals can help ease the burden of plan management and leave you with more time to focus on adding value for clients and employees.
Get Answers to Employer Sponsored Plan Questions with Meld Financial
At Meld Financial, our employer plan specialists help companies manage the multitude of responsibilities that come with plan management. We provide objective advice, support in managing a custodial relationship, investment selection guidance, and robust employee education.
Our decades of assisting businesses with plan management have provided us with first-hand experience to answer your most pressing employer plan questions. Contact us today to review your plan and get started with advisory services.
To stay updated on new regulations and other important retirement plan information, visit the MeldU School of Employer Plans. Also, don’t forget to follow us on LinkedIn, Twitter, and Facebook.
