Year-End Reminders for Qualified Defined Contribution Plans

As the end of 2016 quickly approaches, retirement plan sponsors should promptly consider several important potential tasks. Examples include the following:

• December 1 Deadline for Certain Plan Communications to Participants: Depending on a plan’s design, one or more of the following annual notices might be required: Safe Harbor Notice, Qualified Default Investment Alternative (“QDIA”) Notice, and/or Automatic Enrollment (“QACA” or “EACA”) Notice. For calendar-year plans, if applicable, those 2016 notices must be furnished to participants by December 1, 2016.
• Summary Annual Report (“SAR”): The SAR summarizes information reported on a plan’s Form 5500. Many plans will have to furnish participants and beneficiaries with the 2015 SAR by December 19, 2016, as that deadline will apply to plan sponsors whose 2015 Form 5500 was filed upon a proper extension to October 17, 2016.
• Annual Participant Fee Disclosures: All plans that allow for participant-directed investments must deliver an annual participant fee disclosure (i.e. an ERISA Section 404(a)(5) notice) at least annually to participants and beneficiaries who can direct the investment of their plan account. Now might be the time to deliver this notice, if not already delivered during 2016.
• Plan Amendments: For calendar-year plans, any discretionary amendments that became effective in 2016 must be executed by December 31, 2016 if not already executed during 2016. (Certain discretionary amendments for safe harbor 401(k) plans should be executed before the beginning of the plan year in which they become effective.)
• Year-End Processing: 2016 required minimum distributions for participants over age 70 ½ must be issued by December 31, 2016 unless an exception applies. Also, any participant loans that require Form 1099-R reporting for 2016 should be reviewed and addressed. For example, if a participant loan is no longer being repaid because of an employee’s termination of employment, the plan sponsor may need to make arrangements for a loan offset with its plan service provider before December 31. In addition, if a plan’s 2015 ADP and/or ACP tests failed, then corrective distributions must be made by December 31, 2016.