Corporate sponsored retirement plans are highly regulated and subject to annual reporting requirements. Additionally, there are other tasks that must be completed by the end of the year to keep participants informed, the plan running smoothly, and protect the tax qualified status of the plan. These key tasks can get lost in the shuffle of other business activities, so pay attention to these important dates.
December 1st: Annual Notices for Safe Harbor and Automatic Enrollment
If you have a safe harbor plan, you must distribute an annual notice to eligible participants which includes the details of the plan for the upcoming year. This notice must be delivered at least 30 days, but not more than 90 days, before the plan year begins. According to that timeframe, December 1st is the last day to send this annual notice to participants.
Like with safe harbor notices, employers who use an automatic enrollment feature must notify participants annually – at least 30 days before the beginning of the plan year and no more than 90 days before that time. Automatic enrollment is a useful way to increase participation in your retirement plan and help employees save for retirement. To incorporate this feature into your plan, you must meet the December 1st deadline for distributing the required notice.
December 15th: Summary Annual Report (Extended)
The summary annual report [SAR] summarizes the information provided in Form 5500. It must be provided to each participant no later than 2 months after your company files Form 5500 with the IRS. If your firm 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 three main tasks due on the last day of the year: corrective distributions, RMDs, and amending the plan document to account for any discretionary changes.
If your plan fails ADP or ACP testing, corrective action is generally required – such as returning some contributions to highly compensated employees. If this step is needed, December 31st is the last day to process corrective distributions, or you risk losing the plan’s tax-qualified status.
December 31st is also the deadline to process ‘required minimum distributions’ [RMDs] for plan participants. If RMDs aren’t processed by this date, participants could owe a 50% penalty.
Plan Document Amendments for Discretionary Changes
If you made any discretionary changes during the year, you must amend plan documents by the last day of the plan year (December 31st for calendar year plans). Discretionary changes are any changes that weren’t required by law.
Employer sponsored plan management requires compliance with many regulatory requirements. These responsibilities can be difficult to manage, especially when there are so many different deadlines. That’s where an experienced team of financial professionals can help.
Get Answers to Employer Sponsored Plan Questions with Meld Financial
The team of tax, legal, and investment professionals at Meld Financial have the experience and knowledge to answer your most pressing employer plan questions. With our team on your side, maintaining compliance on a company sponsored retirement offering is a breeze.
Contact us today to learn more.
To stay updated on new regulations and other important retirement plan information, visit the Meld University School of Employer Plans. Also, don’t forget to follow us on LinkedIn, Twitter, and Facebook to stay up to date on the latest developments and insights.