FEBRUARY 2024 EMAIL TO CLIENTS

SPOTLIGHT

Addressing the Burden of Missing Retirement Plan Participants

Smooth plan administration and seamless distributions are just two priorities for a retirement plan sponsor who is responsible for a company retirement plan, like a 401(k). One thing that makes distributions more difficult is when plan participants go missing or can’t be reached by the plan sponsor.

These “MIA” participants not only add to the administrative burden of managing a retirement plan, but they also miss out on accessing their hard-earned plan benefits. Read more.

HOW WE CAN HELP

Are you overwhelmed by notices (year end, fund change, amendment changes/documents)? We have a solution. When you add a 3(16) Administrator to your plan services, we can distribute notices electronically to all your participants. Want to know more? Ask your Definiti Retirement Plan Consultant (RPC) for details.

THINGS TO KNOW

Definiti’s Recommendations on Optional SECURE 2.0 Plan Provisions

SECURE 2.0 included 90+ provisions that could have an impact on your plan. Definiti has carefully reviewed all the provisions, and we’re making recommendations on how you may want to amend your plan to adopt the new optional provisions. Keep in mind some provisions require more guidance before they are final, and many provisions won’t become effective until 2025 or later.

Read our recommendations: Definiti Defaults | How We’re Addressing SECURE 2.0 Plan Provisions

If your plan(s) includes the Document Maintenance Program, any discretionary or mandatory amendments are covered and Definiti will file the amendments for you when needed.

You can always visit the Definiti SECURE 2.0 webpage for timely news on deadlines, provision details and recent updates.

Funding Employee Contributions

It’s important that you deposit all plan contributions correctly and on time. The DOL considers you guilty of using employee contributions for business purposes if the deposits of their contribution into the plan are not made when required.

Do not risk an audit, fines or penalties because of late deposits. As a plan sponsor, you risk having to fund lost earnings to participants for contributions that were not made timely. Make sure you deposit plan contributions into the correct contribution source account (i.e., deferral, Roth, match, safe harbor match, profit sharing and safe harbor nonelective 3%).

The deposit rules are simple:

• If you have a Small Plan (less than 100 participants), deposit all contribution monies in the Trust within seven business days from being withheld.
• If you have a Large Plan (100 or more participants), make deposits as soon as administratively feasible after they are withheld (often considered to be 3-5 days after the payroll date).

Have You Submitted Your Census?

If your plan year ended December 31, this is a reminder to update your annual plan information and employee census data on PlanSponsorLink, if you have not done so already. If your plan requires salary deferral testing, please return your information as soon as possible. This information includes the names, pertinent dates, compensation, deferrals, etc., for all employees who received compensation in 2023, regardless of their employment or eligibility status. Definiti will automatically file an extension for Form 5500 if we do not receive all the needed information from you in time. Keep in mind that an extension fee may apply in accordance with your service agreement.

Phase-2 of Pre-Audit Compliance Pilot Rolling Out “Soon”

Under the Pre-Audit Compliance Program, the IRS will notify a plan sponsor by letter that its retirement plan has been selected for an upcoming examination. The letter gives a plan sponsor a 90-day window to review the plan’s document and operations to determine if they meet current tax law requirements. Please know that if you do not respond within 90 days, the IRS will contact the you to schedule an exam.

If you receive such a letter, it is imperative that you respond to the IRS within the 90-day window; or you WILL be scheduled for an audit.

If you have questions about the Pre-Audit Compliance Program, contact your RPC.

QUESTIONS? CONNECT WITH YOUR RPC OR CONTACT US

Your Definiti RPC is your first and best resource for information about your plan. Reach out to them with questions, and they’ll be happy to help. Or if you’re currently not a Definiti client, call 1-888-912-3653 or email sales@definiti.com for information about our services.