As the sponsor of a company retirement plan, you have many required tasks to complete each year. These include completing regular filings with the IRS, providing important notices to participants, and timely plan maintenance.
Many of these important deadlines fall in the fourth quarter – which is already a hectic time for businesses. To ensure you don’t miss an important date, review the following year-end tasks. Many of these tasks require preparation, so be sure to get started on them well in advance of the deadline.
November 29th: Provide Annual Safe Harbor and Automatic Enrollment Notices
If you have a safe harbor plan, you 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.
Automatic enrollment can encourage participation in your retirement plan and help employees save for retirement. Companies that use this feature must notify participants each year. Like safe harbor notices, the automatic enrollment notice must be delivered 30 – 90 days before the start of the plan year, making December 1st the last day to provide it. You 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 1st falls on a Sunday this year and there is no official guidance allowing these tasks to be completed the following business day. Therefore, it is wise to send the required notices no later than Friday, November 29th.
December 13th: Deliver Summary Annual Report (Extended)
Each year, you must file Form 5500 with the Department of Labor which summarizes the plan, its financial condition, and investments. You must also make this information available to participants through the Summary Annual Report [SAR].
The SAR must be delivered to each participant no later than 2 months after your company files Form 5500. If your firm used an extension for Form 5500 earlier in the year, the last day to provide the summary to participants in a given year is December 15th.
December 15th also falls on a weekend this year, and there is no official guidance to allow you to delay delivery until the following business day. For this reason, you should deliver the required notice no later than Friday, December 13th to ensure you comply with the regulation.
December 31st: Corrective Distributions, RMDs, Plan Changes
There are several tasks you must complete by the last day of the year. These include processing corrective distributions, RMDs, and discretionary amendments to the plan document.
Corrective Actions
If your 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, you may still owe a 10% excise tax. December 31st is also the deadline to correct failed testing with a qualified nonelective contribution if your plan uses current-year testing.
Processing RMDs
Employees that are over a certain age must take annual withdrawals from their retirement accounts – Required Minimum Distributions [RMDs]. These must leave their account by December 31st. As the plan sponsor, you must ensure the transactions are processed on time or participants could owe a penalty.
Plan Document Amendments for Discretionary Changes
If you made any discretionary changes – those not required by law – during the year, you must amend plan documents. These amendments must be made by the last day of the plan year – December 31st for calendar year plans.
There are many other tasks that you need to complete on a regular basis to keep your plan running smoothly such as periodically reviewing investment options and employee benefits. Fortunately, you don’t have to manage these tasks 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 your clients and employees.
Get Answers to Employer Sponsored Plan Questions with Meld Financial
The team of tax, legal, and investment professionals at Meld Financial have the experience to answer your most pressing employer plan questions. With our team on your side, maintaining compliance with 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.
