Year End Housekeeping Reminders for Qualified Retirement Plans

The end of the year is a great time to look at your company's qualified retirement plan and review plan operations, documents, bonding, and start pulling together a file for annual plan testing and audit. You should look at the following items:

Plan Documents
Do the plan's documents match what you're doing operationally? Are you using the correct definition of compensation to allow participants to defer into the plan and are you following the plan's definition of eligibility to allow participants to join the plan?

ERISA Fidelity Bond
Is the coverage sufficient? ERISA requires that plans have coverage of at least 10% of the plan's assets or $500,000 (whichever is less).

Number of Eligible Participants
Plans with more than 100 eligible participants (whether they are deferring into the plan or not) are generally required to engage an independent auditor to audit their 401(k) plan. The number of participants is taken on the first day of the plan year, so if your plan is a calendar year plan and had more than 100 eligible participants on December 31, you may need an audit for the following plan year.

Annual Notices
If your plan is a Safe Harbor Plan, or has a Qualified Default Investment Alternative, or Automatic Enrollment there are required notices that must be distributed to plan participants. Notices are generally due at least 30 days prior to the beginning of the plan year. For calendar year plans, this means that notices must be distributed by December 1 for the following plan year.

Payroll processing of elective deferrals and loan repayments
Did you transmit elective deferrals and loan repayments to the trust within the time frames outlined within your policies and payroll procedures? The Department of Labor requires that elective deferrals and loan repayments be sent to the trust as soon as administratively feasible. If you determine that you have some late contributions the Department of Labor provides a set of procedures to correct and report the failure.

Corporate Transactions
Have there been any mergers or acquisitions during the plan year? Generally, there is a one year period in which an acquired plan may be disregarded for the purposes of plan testing.
Lastly, does the plan serve the purpose for which it was established? Qualified retirement plans can be excellent tools to help business owners plan for their retirement, help employees save for retirement, and provide a competitive advantage in the recruitment of new employees. Plans often can be changed (subject to DOL and IRS regulations) to meet corporate compensation objectives but they do need to be reviewed to meet changing demographic and business needs.
If you determine that you need assistance with any of these items please contact your Employee Benefit Specialist or one of our retirement plan consultants:
Tim Thurston, AIF®
Manager, Retirement Plan Services
(214) 443-2410
Tammy Woodman, QKA
Defined Contribution Consultant
(214) 292-4123


The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.

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