401(k) Compliance: Preparing for Your Annual Plan Review

As a plan administrator, 401(k) retirement plan compliance should be at the top of your priority list. Your organization can avoid fines and safeguard your employees by completing compliance testing and submitting the Form 5500 on time. However, timely and accurate compliance planning can feel complicated.

To help our clients prepare for year-end compliance season, ePlan Services has created our annual plan review portal. We designed this yearly checkup to help you verify your plan information and review your plan’s compliance status. Here’s what you need to know to prepare.

What Is 401(k) Annual Plan Review?

The annual plan review is a guided online process that helps plan administrators verify 401(k) plan information. This information includes details like employee compensation and hours of service. By completing the annual plan review, clients ensure that the data on file is correct for compliance testing and Form 5500 filing.

When should I complete the 401(k) annual plan review?

All plan administrators will receive an email in mid-January when the annual plan review is ready to complete. When you log into your dashboard, you’ll also see a task card prompting you to complete the review. There is a link to the User Guide on the annual plan review home page. This guide will answer any questions you may have. You’ll then have until mid-March to complete it (see email for the exact due date).

What information will I need for the 401(k) annual plan review?

We encourage you to gather some information prior to completing your review, such as:

• Compensation information
• 401(k) contribution and loan repayment details
• Hours of service for each employee

It can be helpful to use payroll summaries or employee W2 forms to gather this data. For a full list of required information, reference your user guide.

What are the risks of not completing the 401(k) annual plan review?

ePlan offers this service to help our clients meet compliance requirements. If you skip the annual plan review, you run the risk of leaving inaccurate information in your plan. Employers who do not properly correct a failed compliance test on time could face a 10% excise tax.

Taking a proactive approach to reviewing your plan also saves time later in the year, as you won’t need to backtrack and correct information.

What Are Some Tips for a Smooth Review Process?

As you begin your 401(k) annual plan review, our team has a few recommendations for a smooth process.

Start early

We recommend taking the review seriously and planning to start early. This gives plan administrators enough time to gather materials, fill out accurate information, and reach out to our team with any questions.

Check the Annual Plan Review User Guide

The 401(k) annual plan review user guide is a comprehensive resource for completing the process. Take the time to read through the guide. We also encourage you to refer to the guide when you have a question.

Double check your information

Filling out each section accurately can save you time in the long run and set you up for successful compliance testing. Double check each section before moving onto the next to verify each detail.

Keep information up to date throughout the year.

Maintaining records throughout the year can help your annual plan review go more smoothly. For example, entering hours and compensation for all employees every payroll will provide more accurate results during the annual plan review process. This will also ensure that eligibility and vesting are accurately tracked for your employees.

Looking for more guidance? Check out our Help Center or reach out to our knowledgeable team.

What Happens After the 401(k) Annual Plan Review?

After you complete your annual plan review online, you’ll be able to request your compliance testing. ePlan Services will complete the following tests:

• Annual deferral limit (ADL) test
• Annual additions limit (AAL) test
• Actual deferral percentage (ADP) test
• Actual contribution percentage (ACP) test
• Top-Heavy test

You will receive an email once the tests are complete and your results are available. Check your user guide for more information on these compliance tests.

As you prepare for your 401(k) annual plan review, the ePlan team is here to support you. Our user guide and Help Center have the answers you need to prep for compliance season.

This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.