End of year checklist that will keep Plan Sponsors off the naughty list

By Yariel Chiong & Alison Murray

With the end of the year right around the corner there is more that you need to worry about than what you are doing on New Year’s Eve. Plan Sponsors should review if any legislative actions or disclosures are required for their Qualified Retirement Plan(s).

Proactive TPA’s will let their clients know if any actions are required for their plan before the clock strikes midnight on December 31, 2011. The following are a few housekeeping items that you should be aware of for 2012:

Safe Harbor 401(k) Plan Annual Notice
Plan Sponsors must provide participants and eligible employees with information about features of their 401(k) Safer Harbor Plan including the safe harbor nonelective contribution or matching contribution under the plan. You’ve already provided this notice by December 1, 2011 for existing participants if you declared your plan safe harbor for 2012. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

401(k) Automatic Enrollment Notice
Plan Sponsors must provide participants and eligible employees with information about automatic enrollment, including deferrals that will be made for a participant if no election has been made by them. You’ve already provided this notice by December 1, 2011 for existing participants if you declared your plan safe harbor for 2012. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

Qualified Default Investment Alternative Notice (QDIA)
Plan Sponsors must provide participants and eligible employees with information about how their funds will be invested absent their investment election. You’ve already provided this notice by December 1, 2011 for existing participants if you have a QDIA. What you need to remember is don’t forget about your newly eligible participants during 2012. This notice needs to be provided to them as well, a reasonable period of time before they become eligible.

Summary Plan Descriptions and Summary of Material Modifications
Don’t forget to hand out your Summary Plan Descriptions and Summary of Material Modifications to newly eligible participants or beneficiaries throughout the year.

Partnership Elections

Partnership Elections must be completed by December 31st. Even if a partner deferred out of their draw and has already deferred the maximum allowable for 2011, a partnership election must be completed.

Enrollment forms

Enrollment forms must be completed before a participant becomes eligible. You need to give the employee enough time to make an election before their entry date. If you do not do this, you may have caused a lost deferral opportunity which would result in an unanticipated employer contribution.

Minimum Required Distributions

You have an employee who terminated employment in 2011 whose already attained the age of 70 ½ and has a first minimum distribution due by April 1, 2012. Don’t forget to mention this to your TPA if you do not provide them with the 2011 census information early enough to make this determination.

The above is just a short list of what to look out for during this time of the year. Contact ACI if you have any questions regarding your plan.

310 212-2600