As the end of 2017 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 2018 notices generally must be furnished to participants by December 1, 2017.
- 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 2016 SAR by December 16, 2017, as that deadline will apply to plan sponsors whose 2016 Form 5500 was filed upon a proper extension to October 16, 2017.
- 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 2017.
- Plan Amendments: For calendar-year plans, any discretionary amendments that became effective in 2017 must be executed by December 31, 2017 if not already executed during 2017. (Note that certain discretionary amendments for safe harbor 401(k) plans should be executed before the beginning of the plan year in which they become effective.)
- Compliance Testing: In January, most record keepers and third party administrator will provide their retirement plan clients with questionnaires. Clients’ responses to the questionnaire’s requests for information (e.g., census data) will form the basis for 2017 compliance testing. Even safe harbor plans must undergo certain testing for 2017. Thus, plan sponsors who do not receive a questionnaire in January from the entity that will perform 2017 compliance testing should request such questionnaire by approximately the end of January.
- Miscellaneous Items for Year-End: 2017 required minimum distributions for participants over age 70 ½ must be issued by December 31, 2017 unless an exception applies. Also, any participant loans that require Form 1099-R reporting for 2017 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 2016 ADP and/or ACP tests failed, any resulting corrective distributions must be made by December 31, 2017.
The failure to comply with some of those requirements can be addressed under the IRS’s correction programs for retirement plans. Please let me know if you have any questions about those programs, as I work with them on a daily basis.