If your plan is a calendar year 12/31 plan year-end, your 5500 has been filed and the year is coming to a close. What items should you be looking at before year-end?
First, your plan may need to provide notices before year-end. If your plan was extended for filing of Form 5500, your Summary Annual Report must be distributed by December 15th. If your plan provides a safe harbor match, you should provide notice of the intent to make that match 30 days before your next plan year, which would be December 2nd. If your plan provides a safe harbor non-elective contribution (i.e. one that goes to all participants regardless of their decision to contribute from their own paycheck), you have the option to send out a notice as well. Lastly, each year, your plan must disclose fees that may be charged to participants’ accounts. This may be referred to as a fee disclosure or 404(a)(5) notice. You may wish to check the last delivery date of that notice to ensure that you are not delinquent on sending that as well. At M&R Wealth Management, we provide one PDF for our clients to distribute all of these notices annually in November/December each year.
Next, you may wish to look at your participant counts on your Form 5500 for this past year. If you filed a short form or Form 5500- SF and your participant count at year-end was near 120, you may need an audit for the year that is drawing to a close or the next plan year that will be starting. You may also consider reaching out to your provider to determine your counts on the first day of this plan year. In addition, you might inquire to see if you have any terminated participants who have balances left in the plan. If your document allows, the plan may be able to force them out to an IRA or to a cash distribution. This would help lower your participant count and perhaps could keep you from a required audit next year.
Are you planning on any optional contributions for this year? Or do you have a required contribution that you will need to deposit for this year? Generally, those will be due on or before you file your business tax return next year. However, this may be the time to reach out to your provider to get an estimated calculation done to determine those amounts. Your calculations would need to be updated when final compensation is available after the year has closed.
Lastly, your provider will likely be sending out a request for information to complete any required testing or calculations for the plan year. You will need to let your provider know if you have had any ownership or officer changes during this year. If you have any related companies, you will need to provide information on those entities as well. You will likely need to provide census details for anyone who performed services for you including their dates of employment, date of birth, full-year compensation, and the amounts they deferred. If you made any employer contributions, you would want to provide those amounts along with details on any compensation you excluded from those calculations. Now might be a great time to do a preliminary test of that data to make sure all items are ready for submission after year-end.
If your plan has an off-cycle year-end, your timeline will of course change. For updated timing on your off-cycle plan, feel free to contact us for a personalized timeline. ML&R Wealth Management provides comprehensive plan consulting and investment advisory services for retirement plans. Contact us today with questions you may have about your retirement plan.