2018 Year-End Compliance Checklist Employment Benefit Plans Isler Dare

November 20, 2018

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This checklist of end-of-year employee benefits compliance deadlines is provided courtesy of Isler Dare PC ( and was written by Andrea I. O’Brien, Vi D. Nguyen, and Ashley F. Hedge.
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2018 Year-End Compliance Checklist

As 2018 quickly comes to a close, we wanted to remind employers of some key year-end compliance deadlines for their retirement and health and welfare plans.

DEADLINE:  November 15, 2018

SBCs and Health Plan Notices

You should distribute a Summary of Benefits and Coverage (“SBC”) for each group health plan option that you offer. Also, if you have not already provided the following documents to employees (or other required recipients) during open enrollment or at some other time this Fall, you should distribute:

  • An updated CHIP notice (Children’s Health Insurance Notice)
  • The annual notice required under the Women’s Health & Cancer Rights Act
  • A Medicare Part D notice
  • A notice of “grandfathered plan status” under the ACA (Affordable Care Act or Obamacare) (if applicable)
  • A HIPAA (Health Insurance Portability and Accountability Act of 1996) notice of privacy practices for any self-funded plans, or a statement describing the availability of the HIPAA notice of privacy practices and where the notice can be accessed
  • The ADA (American Disabilities Act) wellness plan notice (if applicable)
  • The notices required under ACA Section 1557 (if applicable)

DEADLINE:  November 30, 2018

401(k)/403(b) Plan Safe Harbor Notice

If you sponsor a safe harbor 401(k)/403(b) plan, prepare and distribute a notice describing the safe harbor matching or nonelective contributions that you will make to the plan in 2019. The annual notice is required to avoid the ADP/ACP nondiscrimination testing requirements.

401(k)/403(b) Plan Automatic Enrollment Notice

If your 401(k)/403(b) plan automatically enrolls employees in the plan, prepare and distribute a notice describing the level of contributions that will be taken from each employee’s paychecks automatically, unless the employee makes an affirmative election otherwise.

Qualified Default Investment Alternative (“QDIA”) for Defined Contribution Plans

If your defined contribution plan provides that participants’ accounts will be invested in a QDIA unless they direct otherwise, prepare and distribute a notice describing the QDIA. You may distribute a combined safe harbor, automatic enrollment, and QDIA notice for administrative convenience. Also, consider including the Annual Participant Fee Disclosure (discussed below).

DEADLINE:  December 14, 2018

Summary Annual Report

Prepare and distribute a Summary Annual Report for each calendar year defined contribution retirement plan and health and welfare plan that filed a 2017 Form 5500 on extension by October 15, 2018. (Note that there are limited exceptions to the Summary Annual Report rules.)

DEADLINE:  December 31, 2018

Required Minimum Distributions (“RMDs”) from Retirement Plans

Verify with the TPAs/recordkeepers for your retirement plans that annual required minimum distributions have been paid.

Corrective Distributions from 401(k) Plans

If your 401(k) plan failed ADP/ACP (Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP)) nondiscrimination testing for 2017 and you failed to process all corrective distributions by March 15, 2018, process all remaining corrective distributions and report the 10% excise tax on Form 5330.

Correct Operational Errors in Retirement Plans

Confirm that all necessary remedial action, to address and correct any operational errors identified during the 2018 plan year, have been fully implemented, funded, and memorialized with appropriate documentation.

Correct Failed Nondiscrimination Tests

Process corrections if your cafeteria plan or dependent care flexible spending accounts failed nondiscrimination tests under Code Sections 125 or 129 for 2018.

Retirement Plan and Health and Welfare Plan Amendments

For calendar year retirement plans and health and welfare plans adopt amendments reflecting discretionary changes made to the plans’ terms or design that were implemented in 2018, but have not yet been memorialized in writing, or that will take effect in 2019, but must be adopted before being implemented.

Adopt amendments for enhanced disability claims procedures effective April 1, 2018:

  • Wrap documents, SPDs (Summary Plan Description), and disability insurance documents: Amend the appropriate documents (or confirm insurance carrier has done so) to reflect the new disability claims procedures.
  • Retirement plan documents and SPDs:
  • Amend the disability claims procedures to comply with DOL regulations for disability claims filed after April 1, 2018; or
  • Amend the definition of disability, so the plan administrator has no discretion in the determination of a disability (e.g., decision made by the Social Security Administration or long-term disability plan).

Other possible amendments for retirement plans include changes to loan repayment terms by former employees (effective 2018) and to hardship distributions (effective 2019).

Maximum Out of Pocket (“OOP”) Limits

Review your health plan’s OOP limits for compliance with the maximum limits that are permissible under the ACA:

  • For in-network essential health benefits for 2019, the OOP limits are $7,900 for self-only coverage and $15,800 for other coverage options.
  • However, because the OOP limits for individuals are embedded with other than self-only coverage, the maximum OOP limit for in-network essential health benefits cannot exceed $7,900 per covered individual.
  • For high deductible health plans that may be offered with a health savings account, the OOP limits for 2019 are $6,750 for self-only coverage and $13,500 for family coverage.

Adjusted Limits for Retirement Plans

Confirm that your TPAs/recordkeepers for your retirement plans and that your payroll providers have adjusted their systems to reflect the changes affecting retirement plan limits in 2019:

  • The Sections 402(g) and 457(e) annual elective deferral contribution limits to 401(k), 403(b) and 457(b) plans have increased to $19,000.
  • The limit on includible compensation has increased to $280,000.
  • The Section 415 annual benefit limit under a defined benefit plan has increased to $225,000, and the Section 415 annual contribution limit to a defined contribution plan has increased to $56,000.

Adjusted Limits for Health Flexible Spending Accounts (“FSAs”) and Health Savings Accounts (“HSAs”)

Confirm with your health FSA and HSA recordkeepers, and with your payroll providers, that they have adjusted their systems to reflect changes affecting contribution limits for these programs in 2019:

  • The maximum amount that can be contributed to an HSA for a person with self-only coverage is $3,500, and for a person with family coverage is $7,000. Employees who are age 55 or older can contribute an additional $1,000, regardless of coverage tier.
  • The maximum amount of employee contributions to a health FSA for 2019 is $2,700.

Other 401(k)/403(b) Plan Annual Participant Fee Disclosure

Prepare and distribute the annual participant fee disclosure. You must furnish this report to participants (and other required recipients) at least once every 14 months. If you are unsure of when these fee disclosures were last distributed to your participants, consider sending this out with your other 401(k) or 403(b) notices.

Respond to IRS Letter 226J

The IRS is expected to begin notifying employers of their potential employer shared responsibility tax penalties for 2016 (as they are in the process of wrapping up the notifications for 2015). The notification will come in the form of Letter 226J, a sample of which can be found at

If you receive a letter, you should review the letter carefully, because you have an opportunity to respond before the tax penalty is assessed. Letter 226J includes instructions on how to respond, but keep in mind that the first step is that you must respond to Letter 226J on Form 14764 within 30 days of the date of Letter 226J.


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