What Does “Year End” Mean to Me as a Plan Sponsor of a
Retirement Plan?
For full-service retirement plans, each year as your plan year comes to a close Alliance Benefit Group North Central States, Inc. (ABG) will send you a packet of information called the Year End Packet. This packet includes information detailing what the year end cut-offs are for processing contributions and distributions, vesting updates (if applicable), and notices to be delivered to Participants, including the deadlines to do so. Also included are:
For full-service retirement plans, each year as your plan year comes to a close Alliance Benefit Group North Central States, Inc. (ABG) will send you a packet of information called the Year End Packet. This packet includes information detailing what the year end cut-offs are for processing contributions and distributions, vesting updates (if applicable), and notices to be delivered to Participants, including the deadlines to do so. Also included are:
- Updated annual Plan limits
- Important IRS and DOL dates
- The Data Request
Let’s break down each of these topics to help you understand
your responsibilities as the Plan Sponsor, as well as utilize the tools
provided.
Processing Cut-Offs
In order for ABG to have all of the year’s information included on the 12/31 statements, we must receive it in time for it to be processed start to finish. This means that if we provided automated clearing house (ACH) for your payroll file, we need to have the payroll file uploaded to us by Noon Central Daylight Time (CDT) of the date noted in the Year End Packet. This allows time for us to receive the confirmation of deposit for the ACH from the custodian and make sure the file is traded before the close of the calendar year.
In order for ABG to have all of the year’s information included on the 12/31 statements, we must receive it in time for it to be processed start to finish. This means that if we provided automated clearing house (ACH) for your payroll file, we need to have the payroll file uploaded to us by Noon Central Daylight Time (CDT) of the date noted in the Year End Packet. This allows time for us to receive the confirmation of deposit for the ACH from the custodian and make sure the file is traded before the close of the calendar year.
If you send your own deposits, you have a couple of extra days,
but the deposit must be received at the custodian by no later than the second
to the last business day of the year. This only pertains to statements -- you can still
submit information after the New Year and it will be included in the prior
year’s testing.
Distributions need a little extra time due to the processing on
our end and your Custodian’s check issuance policies. The distribution cut-off
will also be noted in your Year End Packet.
Vesting
Vesting is only applicable if your plan has an “hours of service” requirement for vesting and you do not submit hours each pay period. ABG can still update the hours after the calendar year end but the correct vesting will not be reflected on the 12/31 statements.
Vesting is only applicable if your plan has an “hours of service” requirement for vesting and you do not submit hours each pay period. ABG can still update the hours after the calendar year end but the correct vesting will not be reflected on the 12/31 statements.
Notices to Participants
This category includes notices such as the Participant Fee Disclosure (404(a)(5)), the Qualified Default Investment Alternative (QDIA) notice, Safe Harbor notice, or other communications of that nature. Each of these disclosures needs to be distributed to participants no later than 30 days prior to the beginning of the following plan year. ABG does make note of the deadline for each notice throughout the Year End Packet to ensure that you have that information handy.
This category includes notices such as the Participant Fee Disclosure (404(a)(5)), the Qualified Default Investment Alternative (QDIA) notice, Safe Harbor notice, or other communications of that nature. Each of these disclosures needs to be distributed to participants no later than 30 days prior to the beginning of the following plan year. ABG does make note of the deadline for each notice throughout the Year End Packet to ensure that you have that information handy.
Can ABG mail these to Participants
for me? ABG has recently partnered with a third-party called
Media Scope who can mail the notices for you. If you are interested in this
service, please reach out to your Administration Team for more information. If your Plan opts to utilize this service, ABG will have you
sign an agreement with
Media Scope, ask you to “scrub” the Census Notice Report for any erroneous
information, and then ABG will provide the scrubbed report and the applicable
notices for your Plan to Media Scope. That’s it, you’re done!
If you do not use the service, you can still use the Census
Notice Report from the plan sponsor web to determine who needs to receive the
notices. The report can even be exported into an Excel spreadsheet that you
could then mail merge to make mailing labels.
Speaking of that, who DOES need to
receive the notice(s)? Obviously any active Participant needs to receive the
notice(s) but also anyone who is terminated with money still in the Plan as
well as anyone who has met eligibility but hasn’t deferred yet. You also need
to provide the notice(s) to any beneficiaries of deceased participants --
basically anyone who has a plan status of Active or Inactive when looking at
the Plan Status column under EE Search on the Plans Sponsor web.
Updated Plan Limits
Each year (usually mid-November), the IRS determines what the “plan limits” are for the following year. This includes compensation limits, total plan contribution limits, deferral limits, catch-up contribution limits, taxable wage base, and compensation limits in relation to definitions of an HCE (Highly Compensated Employee) or a Key Employee. ABG will include a chart of all of these limits in your Year End Packet that shows the following year as well as the previous four to five years’ limits.
Each year (usually mid-November), the IRS determines what the “plan limits” are for the following year. This includes compensation limits, total plan contribution limits, deferral limits, catch-up contribution limits, taxable wage base, and compensation limits in relation to definitions of an HCE (Highly Compensated Employee) or a Key Employee. ABG will include a chart of all of these limits in your Year End Packet that shows the following year as well as the previous four to five years’ limits.
Important IRS & DOL Dates
ABG also provides a page indicating important dates for the IRS and DOL deadlines, such as the Form 5500 deadline or when excess deferrals due to an ADP failure need to be returned by. Most of these deadlines are relative to the Plan year end date, so they won’t be the same for a plan with a 12/31 year end date as is for a 5/31 year end date, but there are a few that are the same for everyone regardless of plan year end.
ABG also provides a page indicating important dates for the IRS and DOL deadlines, such as the Form 5500 deadline or when excess deferrals due to an ADP failure need to be returned by. Most of these deadlines are relative to the Plan year end date, so they won’t be the same for a plan with a 12/31 year end date as is for a 5/31 year end date, but there are a few that are the same for everyone regardless of plan year end.
Data Request
The data request part of the packet provides information for the Audit Team to prepare the Form 5500 (if applicable) and provides your Administration Team the necessary information to complete the Plan’s compliance testing. It is very important that the Data Request be completed in its entirety and to the best of your ability. Please do not hesitate to reach out to your Administration Team if you have any questions while completing this. It’s much better to get those questions answered right away.
The data request part of the packet provides information for the Audit Team to prepare the Form 5500 (if applicable) and provides your Administration Team the necessary information to complete the Plan’s compliance testing. It is very important that the Data Request be completed in its entirety and to the best of your ability. Please do not hesitate to reach out to your Administration Team if you have any questions while completing this. It’s much better to get those questions answered right away.
We hope this information is helpful. As always, if you have
questions on any of this information, please reach out to your Administration
Team at 1-800-898-9344. We’re always happy to help!!
The Author: Michele Etherington, QKA
Disclaimer: This blog is of an informative nature and should
not be taken as advice. Please work with the appropriate parties for those
services.
