Things for Plan Sponsors to Consider as the Year Winds Down

During 2020, there have been immediate and upcoming changes for the retirement plan industry that have affected and will continue to affect the plan operations. In addition to these changes, there are routine matters that Plan Sponsors will need to address before year end. Below are some things to consider as the year winds down:

  • Have you made the timely disclosures to plan participants, such as the 404(a) fee disclosures or the Summary Annual Report? It may be helpful to have a checklist with the required disclosures to ensure they are all appropriately, timely provided. Some additional guidance from the DOL can be found here regarding disclosures:
  • For plan sponsors of defined benefit pension plans that utilized the CARES Act extension related to funding contributions, have you considered the timing of any additional payments? Payments were extended until January 1, 2021. As you are reviewing the funding schedule, it is important to consider that additional interest that will be owed on the delayed contributions.
  • Have you reviewed the annual required amendments list to ensure your plan compliances with the qualification requirements? The required amendments list can be found here:
  • Has it been decided if the 2021 plan year will be a safe harbor plan year for the Plan? If yes, has the safe harbor notice been timely distributed to participants? As a note, the SECURE Act eliminated the safe harbor notice requirement for non-elective safe harbor plans  for plan years beginning after December 31, 2019. For more information regarding the Safe Harbor notices, please visit the IRS website here:
  • Have  required adjustments been made for the changes in the IRS contribution plan limits for the 2021 plan year? Although there has been no change in the employee deferral limit, the maximum contribution limit increased by $1,000 to $58,000 (not including catch-up contributions). In addition, the employee compensation limit for calculating employer contributions increased by $5,000 to $290,000.

Leave a Reply