Year-End Reminders for Defined Contribution Plans:

As the end of 2022 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 notice. For calendar-year plans, if applicable, those notices for 2023 generally must be furnished to participants by December 1, 2022.
  • Special 403(b) Plan Notices:  403(b) plan sponsors must ensure that a “universal availability” notice is provided to participants at least once per year. Also, if a 403(b) plan sponsor has adopted an IRS pre-approved plan document, then an Annual Additions Contribution Limit Notice is likely required (depending on the plan’s terms).   
  • Summary Annual Report (“SAR”): The SAR summarizes information reported on a plan’s Form 5500. Many plans will have to furnish participants (and beneficiaries of deceased participants) with the 2021 SAR by December 19, 2022, as that deadline will apply to plan sponsors whose 2021 Form 5500 was filed upon a proper extension to October 17, 2022.
  • Annual Participant Fee Disclosures: All plans that allow for participant-directed investments must deliver a 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 2022.  
  • Discretionary Plan Amendments: For calendar-year plans, any discretionary amendments (i.e., those that are not legally-required, such as a change in the plan’s eligibility provisions) that became effective in 2022 generally must be executed by December 31, 2022. In addition, certain discretionary amendments for calendar-year safe harbor 401(k) plans that will become effective in 2023 must be executed before January 1, 2023.
  • Legally-Required Plan Amendments:  Many plan sponsors do not have to execute amendments for the SECURE Act, the CARES Act, and other laws until as late as 2025. However, I am recommending that my clients execute those amendments as soon as possible, to help ensure that their plan document aligns with their plan’s operations. Also note that non-profit (i.e., non-governmental) organizations’ 457(b) plans must be updated for those laws by the end of 2022.  
  • Compliance Testing:  In January of 2023, many recordkeepers and third party administrators will provide their retirement plan clients with questionnaires. Clients’ responses to the questionnaires’ requests for information (e.g., census data) will form the basis for 2022 compliance testing. Even safe harbor plans must undergo certain testing for 2022. Plan sponsors who do not receive a questionnaire in January from the entity that will perform 2022 compliance testing might wish to request the questionnaire by the end of January.
  • Miscellaneous Items for Year-End:  Participants generally must begin receiving distributions from their retirement plan by April 1 of the calendar year following the later of the year in which they attain age 72 or the year in which they retire. Also, any participant loans that require Form 1099-R reporting for 2022 should be addressed. In addition, if a plan’s 2021 ADP and/or ACP tests failed, any resulting corrective distributions must be made by December 31, 2022.

The failure to comply with most of those requirements can be addressed under the IRS’s formal correction programs for retirement plans.