There are some key administrative dates and deadlines for defined contribution retirement plans in July to be aware of. Please contact PBTK if you have any questions about these pending deadlines.
- 408(b)(2) goes into effect
- Summary of material modifications
- Notice to terminated vested employees
- Plan audit
- Form 5500 or Form 5558
- Form 8955-SSA or Form 5558
- Annual benefit statements
- Form 5330
Contact us for information on preparing the tax and audit documents necessary for your 401(k) or defined contribution retirement plan at 702-384-1120.
Has your auditor contacted you yet to set up on-site visits for your 401(k) audit? If they haven’t, contact PBTK to find out where you should be in the audit process to meet the following deadlines:
For plans with a 12/31 year end, the audit due date is 7/31/12.
Extensions are available for 2.5 months if extension request is filed. For a 12/2011 plan year end, this would be on 10/15/12. Is your audit process well under way?
Why is it important for a plan sponsor to be aware of the top heavy status of their plan? Because top heavy plans require additional testing, plus contributions to the plan participants must conform.
If the account balances of key employees combine to equal 60 percent of the total account balances in a 401(k) plan, then the plan is top heavy. Who are key employees? They are owners with five percent ownership, or an owner with even a small percent of ownership (one percent) and a substantial compensation (currently $150,000 and up).
Key employees cannot receive a contribution unless the employer makes the same contribution (up to three percent) for all non-key employees. This often means a plan will wait on any contributions, matching or profit sharing until the plan balances out (which would require contributions from non-key employees until their combined account balances represent 40 percent of the plan).
Though this is often a small plan issue, the top heavy status of your employee benefit plan can affect your plan audit. Please contact an experienced 401(k) plan auditor and/or administrator with any questions you may have.