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.
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).
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.
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.
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,
- 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.
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.