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
In Part I of this series , we explored how differences in retirement plan service models can influence risks related to compliance, oversight, and fiduciary areas. In Part II, the focus shifts to a more concrete question: How do these differences ultimately affect the total cost of maintaining a retirement plan over time? While administrative fees are often the most visible expense, they represent only a portion of a plan’s true cost. The broader financial impact—what is often referred to as total cost of ownership—includes the downstream effects of operational efficiency, compliance accuracy, and the ability to fully utilize the plan’s design.
Medical and dental practices often assume their retirement plan options are relatively straightforward and should be simple to administer. In reality, these businesses frequently present some of the most complex retirement plan challenges among small-to-mid-sized employers.
Construction and contractor businesses often operate with highly dynamic workforces, using seasonal or project-based hires, independent contractors, and the like. The flexibility required in these types of companies—while essential to project-based work—can create significant retirement plan compliance risks. From a retirement plan perspective, these workforce characteristics require careful oversight, as even small administrative inconsistencies can lead to costly compliance failures over time.