Autumn is well underway, and with it comes those seasonal tasks:
Hire the neighborhood kid to rake fallen leaves… Check.
Stock up on candy for Halloween trick-or-treaters… Check.
Put together this year’s annual 401(k) plan notices…
Check?!
Consider this a gentle reminder from your friendly neighborhood 401(k) plan auditor:
Annual 401(k) plan participant notices are due December 2.
In order to comply with Department of Labor regulations, certain notices must be sent to eligible employees no later than 30 days before the start of the next plan year.
As a result, the first business day of December, or Month 12 of your fiscal year, is the last day to distribute annual participant notices regarding the following key topics. And this year, that deadline falls on December 2, 2024.
There are three types of notices due at this time each year.
401(k) safe harbor notice
Safe harbor 401(k) plans are similar to traditional 401(k) plans, except they provide for fully vested employer contributions, among other conditions defined by the IRS. Thus, safe harbor plans are exempt from annual nondiscrimination testing that would otherwise be required.
Consequently, employers with safe harbor 401(k) plans must provide annual notice to eligible employees within 30–90 days of the start of the plan year or when employees become eligible, with detailed information on the plan.
More on safe harbor 401(k) plans.
Automatic enrollment notice
If your 401(k) plan automatically enrolls eligible employees, then you must notify all eligible employees about certain benefits, rights, and features. Employees must receive an initial notice prior to automatic enrollment in the plan and a similar notice each year.
Accordingly, the annual notice must be issued to all eligible employees no more than 90 days and at least 30 days prior to the beginning of the next plan year. It can be combined with the QDIA notice.
More from the DOL on automatically enrolling retirement plans.
QDIA notice
According to the Department of Labor, a Qualified Default Investment Alternative (QDIA) notice must be given to participants and beneficiaries at least 30 days before the beginning of each plan year.
Include in the notice an explanation of the right of participants and beneficiaries to direct investment of the assets out of the QDIA. Additionally, include information about other plan investments.
Meeting these deadlines helps avoid penalties and ensures the plan maintains compliant status. Besides, this provides ongoing benefits to participants and sponsors alike.
Need help with this year’s 401(k) plan audit? Then we’re here to help. Contact Cassell Plan Audits today.