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Preparing a 401k Plan Census

Published by Kim Moore on Jan 14, 2021 6:00:00 AM

Are you prepared for your 401k Plan Census?

At the beginning of the year, your record-keeper will routinely ask you to prepare or review something called a Plan Census. Hopefully, they provided instructions along with this request, but if you need some help, this blog post will provide some additional information for you.

The Census contains information for each employee of the company including:

  • Employee name
  • Employee date of birth
  • Employee hiring date
  • Employee termination date (if applicable)
  • Employee hours worked
  • Employee compensation and amounts contributed to the 401(k) plan during the year.

Are You Prepared for your 410k CensusThe specific provider may request additional information depending on the nature of your plan provisions. This data is compiled based on the year-end information from the prior year. The data is used by the provider to complete the annual discrimination testing required by the Internal Revenue Service and Department of Labor standards. This testing is very important to ensure the plan remains qualified. To ensure the accuracy of the Plan Census, Plan Administrators can complete a reconciliation of the compensation amounts to the year-end payroll data; review random employee data and compare to the employee Human Resources file to ensure accuracy; and examine the overall data for inconsistencies such as employees that remain active with the company but have no compensation, or employees with participant 401(k) contributions but no related employer match contributions.

It is important to verify the information before you send it to the record-keeper and it will be much more efficient to review it at the beginning of the process instead of rushing through it and finding errors in your discrimination testing. This will require rework and may add to your plan fees from the record-keeper for repeated testing. Timing of completion of the Census is also very important. Any corrective action needed from the discrimination testing must be completed by specific dates (March 15th is a common due date for standard 401(k) plans).

Failure to complete this action timely, can incur additional “late” fees to the company and additional administrative work for you so pay attention to the dates given to you by the record-keeper to avoid these headaches.

When it’s time for your retirement plan audit, it’s essential to hire a CPA firm that specializes in 401(k) auditing to ensure that the process goes smoothly and accurately. At Summit CPA, we offer multiple resources and technology to assist you entirely “off-site”, and with little or no distraction to your daily office routine. We also offer flat-fee pricing for 401(k) audits so there are no surprises when you receive your bill. To find out how we can assist your business, contact our office at (866) 497-9761 to schedule an appointment.

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