January (Month 1)
You should also begin planning for annual compliance testing to make sure that you are running your plan according to your plan terms and operating within all legal limits.
Finally, if your plan has 100 or more participants, you need a plan audit from an independent qualified public accountant (IQPA). Although the audit is not due until July 31 or the last day of Month 7, an audit can take up to six months. Therefore, January/Month 1 is an ideal time to engage an independent auditor.
January 31: The last day of January is the deadline for your plan provider to send IRS forms 1099-R, 945, W-2, 1099-NEC, and 1099-MISC your plan participants.
February (Month 2)
February is an active month to prepare for various compliance activities.
Testing for discrimination is essential to demonstrate that your plan does not discriminate in favor of highly compensated employees (HCEs) when it comes to contributions and deferrals. You may be required by your recordkeeper to provide participant data for the nondiscrimination, top-heavy and 402(g) compliance testing this month.
Two main tests exist for this testing: Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP). The tests determine whether the average contributions and deferrals of HCEs match the average contributions and deferrals of employees overall.
Failing such tests may require corrective action in the form of Return of Excess (ROE) Contributions that must be completed no later than the middle of March/Month 3. If you do not make these ROE distributions, you are subject to a 10% excise tax on the failure amount.
- You can improve your nondiscrimination test outcomes by implementing auto-enrollment for employees, auto-escalation, and offering a Safe Harbor option
- Make sure you address any discriminatory issues in your plan design when you consider plan design for the following year (typically starting in October/Month 10 of the current year
In addition, you should plan for and calculate any Required Minimum Distributions (RMDs) following IRS requirements for the distribution amount. RMDs are required for plan participants older than 73 (or 72 if they reached that age before January 1, 2023).
March (Month 3)
March 15: You must remediate any ADP/ACP testing failures no later than March 15 or the 15th of Month 3.
March 31: You must also file (electronically) the required IRS reporting forms by the last day of the month. These forms can include line items related to your plan.
- W-2: compensation paid to employee plan participants
- 1099-R: distributions from the plan to participants
- 1099-NEC: compensation paid to non-employee plan participants such as qualified contractors
- 1099-MISC: payments made to plan service providers, such as accountants, administrators, attorneys, auditors, consultants, and other service providers
April (Month 4)
April 1: A participant must make any Required Minimum Distributions (RMDs). RMDs are required for plan participants older than 73 (or 72 if they reached that age before January 1, 2023). For a participant's first RMD, and only their first, they may delay taking a distribution until April 1 of the year after they turn 73.
For example, if a participant turned 73 in June of this year, they have two choices:
- They can take their first RMD by December 31, 2023
- They can delay taking their first RMD until April 1 of next year (the year after they turn 73)
If a participant chooses to delay, they'll have to take their first and second RMD in the same year, which may push them into a higher tax bracket.
Excess contribution distributions also apply when employees contribute more than federal annual contribution limits. The maximums vary by plan type. For 2024, these contributions are as follows (subject to filing status and income):
- Simple IRA: $16,000, with a catch-up contribution of $3,500 for individuals age 50 or older
- 401(k): $23,000, with a catch-up contribution of $7,500 for individuals age 50 or older
April 15: When employee contributions exceed these limits, excess contributions and any associated earnings from the plan must be withdrawn. It is crucial to notify employees, set up these distributions, and send required information to employees. Do this on the Friday before the deadline if it falls on a weekend.
If you offer Health Savings Accounts (HSAs), these also must be processed before the tax year filing date.
- Because most employees must file their 2023 taxes by April 18, these actions must happen in March, not in Month 4
- Proactively monitor this issue to catch and distribute excess contributions early to avoid penalties and additional tax complexities
- Active non-owner employees have the option to take an RMD but are not required to do so.
May and June (Months 5 and 6)
If your plan requires an independent audit, you should be ready to review the result at some point in June/Month 6. You must include the audit when you file Form 5500.
July (Month 7)
July 29: Distribute Summary of Material Modifications (SMM) (or an updated SPD) to participants for amendments adopted in the prior year.
July 31: On the last day of July/Month 7, you must file two forms:
- Form 5500: Discloses your plan's financial information and compliance with laws and regulations, especially the Employee Retirement Income Security Act (ERISA). Unless you file for an extension, you must file this form, along with your audit report if required, with the U.S. Department of Labor and the Internal Revenue Service
- 8955-SSA: An annual statement Identifying separated participants who have vested benefits in your plan. Unless you file for an extension, you must file this form with the Internal Revenue Service and the Social Security Administration
- You can request an extension for filing these forms using Form 5558. The extension can be for up to two and a half months
September (Month 9)
September 20: By the last day of September/Month 9, you must provide a Summary Annual Report (SAR) to all plan participants, beneficiaries, and other payees, and plan participants, including those no longer employed by you.
The SAR must be provided in a manner and format that you reasonably expect to result in the recipient's actual receipt of the SAR. This requirement means you must make good-faith efforts to deliver them to a valid mailing or electronic address.
You can provide the SAR electronically:
- If you have provided notice of Internet availability to required recipients
- If they consent to receive the SAR electronically in writing
- If you retain a record of the consent
Unless you meet all these conditions, you must provide the SAR in paper format.
- Requesting an extension for Form 5500 also affects the SAR deadline. You must distribute a SAR no later than two months following the filing date for Form 5500
October (Month 10)
October 15: This is the deadline to retroactively amend your plan to correct a 410(b) coverage or 401(a)(4) nondiscrimination failure.
The final quarter of your plan year is the ideal time to begin considering plan changes so that you are ready to implement them for the following year.
Your governance committee should begin discussing:
- Plan changes that may help attract and retain employees
- Compliance issues caused by plan design issues that you should minimize or remove
- Benchmarks of plan and provider performance
- Implementation timelines for plan changes
- Keep in mind that any extensions of required filings mean that you must track the filing dates for Forms 5550 and 8955-SSA and the distribution of SARs. These must occur no later than the 15th of this month
November and December (Months 11 and 12)
December 1: The first day of December/Month 12 is the last day to distribute the 401(k) safe harbor, automatic enrollment and QDIA annual notice to plan participants.
December 31: Several items require processing by the last day of the plan year, typically December 31. These transactions include minimum distributions (RMDs) and de minimis distributions, loan-related payments, corrections of ADP/ACP errors, and the adoption of discretionary plan amendments.
Avoid an unnecessary rush by identifying these items in November/Month 11 so that your plan administrator has sufficient time for processing.
On December 29, 2022, significant changes for retirement plans were signed into law. A part of the Consolidated Appropriations Act, specifically “Division T” also known as SECURE 2.0, builds upon the foundation laid by the 2019 Setting Every Community Up for Retirement Enhancement Act (now referred to as SECURE 1.0). In 2024, the following key provisions will be effective:
- Participants in Roth 401(k)s no longer need to take RMDs. This conforms to the rule that already applies to Roth IRA account owners.
- Employers can offer student debt relief through workplace retirement plans, such as 401(k)s, by making matching contributions tied to a participant's student loan repayments.
- Emergency savings accounts are coming. Employee plan sponsors can create emergency savings accounts for participants, who could then make Roth pay-ins (on an after-tax basis) to that savings account within the plan. A participant's account balance cannot exceed $2,500.
- Domestic abuse victims under age 59½ can take up to $10,000 from their IRAs or 401(k)s without paying the 10% penalty tax.
- Up to $1,000 can be withdrawn penalty-free from IRAs or 401(k)s for emergencies, even though the person hasn't yet reached 59½.