There are many tasks that a Plan Sponsor needs to complete by the end of the year to be ready for the actual year-end activities required for Plan compliance. As you may have a little extra time before we reach the holiday season, we wanted to provide a listing to help you prepare for the year-end activities.
We recognize that most Plans have a December 31st year-end, so this blog will review some actions that as a 401(k) Plan Sponsor, you should take the time to prepare the Plan for the year-end activities that will be required:
- At year-end is a good time to review those inside your Company that has administrative access to the Plan website. Ensure all staff with the access still need it. Also, verify the type of access held and make changes if anyone has been granted more access than they need.
- Review the Plan Investment performance with your Investment Advisor. You should be conducting periodic reviews but at year-end, you can review the full-year performance and get a longer-term view of overall performance. Discuss any needed updates to the Investment lineup with the advisor.
- Discuss the past year with your third-party administrator/service provider and review any administrative issues that occurred. Consider updating your procedures, if needed, based on the discussions. Also, it may be time to update your Plan Document/Adoption Agreement. Discuss this option with your provider. Review the upcoming Compliance calendar to ensure you have a thorough understanding of all required items.
- You will be asked to provide the Plan Census for the year in the first part of January. Begin working on the Census format and gathering the required information in December to make the January work go smoothly. Also, review the number of eligible Plan participants. If you have more than 100 or are approaching that number, you will need a Plan audit. Contact a qualified public accountant to begin planning for the audit.
- Make a formal review of the Plan financial statements to ensure any issues identified can be corrected before the year-end statement generation process. Also, review any transactions that need to occur late in the year such as the contribution from the last payroll of the year, distributions that are requested late in the year, and other related items. Discuss handling these items with your service provider to ensure you understand how to handle them.
- Review the amount in the forfeiture account and discuss with your service provider the procedures to utilize any outstanding amounts before year-end to reduce employer contribution amounts or pay Plan expenses.
At Summit CPA we specialize in retirement plan audits. If you would like to discuss our audit process in more detail or need an audit contact our office at (866) 497-9761 to schedule an appointment. We can help you navigate the world of the 401(k) audit as proficiently as possible. We also offer off-site assistance and flat-fee pricing so there are no surprises when the job is complete.