4th Quarter Compliance Reminders
August 28, 2024
As we approach the end of 2024, there are plenty of important deadlines to be mindful of. Staying on top of these deadlines contributes to the ongoing compliance of your plan and provides a seamless experience for your employees.
New SECURE Act 2.0 | Long-term part-time employees
Starting in the 2025 plan year, the SECURE Act 2.0 lets part-time employees who've worked at least 500 hours for two consecutive years join the company's 401(k) plan. Here's a quick guide for employers:
- January 1, 2025: Part-time employees who work 500 hours/year for 2 consecutive years are eligible to participate in the company’s 401(k) plan.
- Check your records: Look at your employee data to see who'll be eligible.
- Talk to them: Once you know who's eligible, tell them about their new 401(k) options.
Doing this early helps get your part-time employees smoothly onboard with their new benefits.
Q4 Compliance Highlights*
October 15
- If on extension, filing deadline for the Form 5500
- If on extension, filing deadline for individual and/or corporate tax returns and final contribution deadline for deductibility
- Adopting a retroactive amendment to correct minimum coverage or nondiscrimination requirements (IRC Sections 410(b) & 401(a)(4))
December 1
- Sending annual 401(k) and safe harbor match notice*
- Sending annual Qualified Default Investment Alternative (QDIA) notice*
- Sending annual automatic contribution arrangement notice (ACA)*
- It's important to send these notices at least 30 days (and not more than 90 days) before the beginning of each plan year.
December 15
- If on extension, deadline for distributing SAR to participants*
December 31
- Processing corrective distributions for failed ADP/ACP test to avoid the 10% excise tax
- Correcting a failed ADP/ACP test with qualified nonelective contributions (QNECs)
- Converting existing 401(k) plan to safe harbor non-elective design for current plan year
- Amendment to remove or convert to safe harbor status for next plan year
- Amending plan for discretionary changes implemented during plan year (certain exceptions apply)
- RMDs due under IRC Section 401(a)(9) to avoid penalties
Sometimes retirement plan problems begin with bad decisions. Other times, they begin with good intentions.
Law firms often have compensation structures that are more complex than those of other business types. This is attributable to having both equity and non-equity partners, large year-end bonuses, variable associate compensation, and high contribution goals for senior attorneys -- all these factors and more affect how a retirement plan operates. While these structures can create opportunities for sophisticated retirement plan design, they can also create testing volatility and compliance risk, especially if changes in compensation (or partnership/ownership) are not addressed throughout the year as they occur.
Technology is quickly transforming retirement plan administration. Today, employers can launch a retirement plan, connect payroll, enroll employees, process contributions, and access reports, all electronically and with far less manual effort needed than in the past.