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Top 10 year-end checklist for Plan Sponsors

December 3, 2018

As the end of the year quickly approaches, it’s a great time to review and assess your employee benefit plans to ensure they’re compliant and up to date. Below are the “Top Ten” strategies you should consider prior to December 31:

  1. Is your plan on track to require an audit? Generally, most existing benefit plans require an audit once the number of eligible employees exceeds 120 on the first day of the plan year. Review the “80-120” rules in the Internal Revenue Service Form 5500 instructions.
  2. Verify that your plan is properly making automatic cash-outs for participants that are no longer active and are within the thresholds set by the plan document. This could reduce your number of eligible employees below the audit threshold.
  3. Does your plan have a balance in the forfeiture account? The Internal Revenue Service requires that such funds be used on an annual basis and not be permitted to accumulate. Refer to your plan document regarding how the forfeitures should be used. For instance, should they be used to reduce employer contributions or pay plan expenses? Be sure the process is followed.
  4. Review the plan’s participant deferral remittance procedures, and verify that the funds are being transferred into the plan as soon as administratively possible. You may need to accelerate the process.
  5. Is it time for the plan to adopt auto-enrollment and/or auto-escalation? These options are great ways to get your employees to start saving for retirement.
  6. Will your company be paying a year-end bonus to its employees? Make sure to read your plan document to determine if bonuses are considered eligible compensation.
  7. Part of a plan administrator’s fiduciary duty is the continual monitoring of investments offered by the plan. Schedule a review of the plan’s investments with your independent investment advisor and confirm that the plan is in compliance with the investment policy statement.
  8. If your plan document is other than a prototype plan document, verify that the document has been amended to conform with current Internal Revenue Service regulations.
  9. For defined benefit plans, there has been a change in the mortality tables for 2018. Review the impact of these table changes with the plan actuary.
  10. 2019 will bring some changes to the contribution ($19,000 plus catch-up of $6,000 where applicable) and compensation limits ($280,000) for benefit plans. Verify that the limits are taken into consideration with an effective date of January 1, 2019. For 2018, consider whether the maximum contributions have been made by the sponsor, or if there are additional contributions that could be made for 2018.

If you have questions about any of the above items or need assistance, contact your CSH Employee Benefit Plan advisor. We’re happy to help!

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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