2018 Year-End Checklist for Plan Sponsors

As the end of the year approaches, plan sponsors must ensure that they are preparing for proper adherence to regulatory and legislative requirements. ERISA compliance can be a tedious, complicated, and time-consuming process. The following plan sponsor checklist will help cover some of the most important aspects that all sponsors should keep in mind to make the year-end process less challenging.

1. Check Plan Documentation

The plan document should be kept current to adhere to current laws and regulations. Additionally, updates to plan documents and terms throughout the year should undergo review annually. If there have been any plan design implementations during the year, the plan must be amended to reflect these changes. Any plan amendments require timely notification to participants and can be stated in the Summary Plan Description or Summary of Material Modifications.

Plan sponsors should check criteria such as the plan definition of compensation for deferrals and allocations, identification of plan eligible employees, 401(k) ADP and ACP nondiscrimination tests, and more.

2. Confirm Participant Notices

Notices to all plan participants are required to be sent annually for transparency and disclosure purposes. While the types of notices are dependent on your plan design, BrightScope.com outlines some common participant notices that are applicable to most 401(k) and 403(b) plan sponsors:

• Summary Plan Description (SPD) or Summary of Material Modifications
• Automatic Enrollment
• Qualified Default Investment Arrangement Updates
• Fee Disclosure
• Safe Harbor
• Summary Annual Report

Especially for larger organizations, maintaining updated mailing information, tracking the delivery date, and confirming receipt of such participant notices can be quite the headache. Plan providers should be able to assist with these challenges by providing clear and complete records of delivery.

3. Review Yearly Contributions

All plan sponsors should review contributions made throughout the year and make any adjustments, if necessary. For example, a common check is to make sure that employees have not contributed above the maximum annual contribution limit. All employer matching contributions eligible to a plan must also be made in accordance with the plan policy terms.

Non-discrimination testing must be done annually.  A best practice is to do a pre-test to be able to identify and possibly remedy possible issues in advance.

4. Review the ERISA Fidelity Bond Policy

Section 412 of ERISA outlines the policy of fidelity bonds, which provides a form of insurance against fraudulent administration of an employee retirement plan. For plan sponsors that are required to maintain an ERISA bond, be sure to confirm that your organization is meeting the fiduciary requirements of the policy. This includes holding a bond that is generally 10 percent of plan assets up to $500,000 total.

Also, while not a requirement, having liability insurance to protect the fiduciaries should also be reviewed.

5. Check for Errors

A Form 5500 has to be filed each year by most plan sponsors. What’s important is that every plan sponsor should carefully review official submissions and forms once completed. In fact, the IRS states that as many as 90 percent of Form 5500 submissions had at least one error. From filing multiple forms to forgetting to check the short plan year return/report box, even the most careful organizations can be prone to making a simple mistake.

Finally, an understated reminder is always to remember to make a backup copy of every official document. Having this documentation will be extremely valuable in any potential audit scenario.

We Can Help

Following these guidelines will help your organization prepare to stay on top of the administrative and regulatory challenges as a plan sponsor. Enlisting the help of a qualified retirement plan consultant is beneficial to plan sponsors and their plan participants. As an independent Registered Investment Advisor, PlanPILOT is not tied to any investment fund or recordkeeper. We offer clients unbiased advice and assistance to control their retirement plan risks and deliver benefits effectively. We encourage you to contact us at (312) 973-4911 or info@planpilot.com so we can help your retirement plan administration team and plan participants achieve better outcomes.

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