Best Practices for Year-End Preparation

It is hard to believe, but the end of the year is rapidly approaching! To avoid costly errors that can arise from inadvertent errors in the year-end crush, plan sponsors should begin talking with their service providers now about what must be done before December 31, 2022.

Retirement Plan Disclosures. There are a host of notices and disclosures that need to be made throughout the  year. However, there are several notices generally given at  the end of the year. The following is a list of common year end disclosure requirements for retirement plans: 

  • Safe harbor notice — For plans utilizing a safe harbor  plan design, this notice must be distributed to participants 30-90 days prior to the beginning of each plan  year for plans relying on safe harbor rules; by December 1, 2022, for calendar-year plans.  
  • Automatic contribution arrangement (ACA) notice —  Plans utilizing an automatic contribution feature must  provide a notice to participants 30-90 days prior to the  beginning of each plan year; by December 1, 2022, for  calendar year plans.  
  • Qualified default investment arrangement (QDIA)  notice — Plans availing themselves of the fiduciary protections of using a QDIA must provide a notice to participants 30-90 days prior to the beginning of each plan  year; by December 1, 2022, for calendar year plans. 
  • Annual participant fee disclosure documents —  ERISA plans must provide an annual fee disclosure at  least once in each 14-month period. If you distributed the fee notice with your other notices toward the end of  last year, plan to do so again this year.
  •  Summary annual report (SAR) — ERISA-covered de fined contribution plans must provide the SAR to par ticipants within nine months of the end of the plan year  or two months after the Form 5500 filing deadline. For  calendar year plans, this generally means the SAR is due  September 30 if the Form 5500 was not extended or  December 15 if the Form 5500 was extended. 

These notices should be carefully reviewed to ensure all  provisions are included and accurate and reflect all updates  made in the past year. Keep in mind that vendor-prepared  and distributed notices are often computer-generated  and may not accurately reflect special features of a plan (particularly if you use an individually designed plan or have any special addenda or special effective dates for your preapproved plan).

For a retirement plan, ineffective or incorrect notices may  result in confusion among participants as well as errors and  penalties. Be sure you know what notices are required,  review all notices carefully, and address any concerns or  questions with your trusted team of service providers.