2020 Checklist Courtesy of IslerDare

2020 Year-End Compliance Checklist

December 15, 2020

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Courtesy of IslerDare PC, we’re providing you a year-end compliance checklist with actions you may need to take now regarding your organization’s health, welfare and retirement plans.

IslerDare provides 2020 Year-end Compliance Checklist

December Compliance Checklist Deadlines

December 15: Prepare and distribute the Summary Annual Report (“SAR”) for each calendar year defined contribution retirement plan and health and welfare plan that filed a 2019 Form 5500 by October 15, 2020. (Note that there are limited exceptions to the SAR rules.)

December 31: Confirm with the third-party administrators (TPAs) /recordkeepers for your retirement plans that annual Required Minimum Distributions (“RMDs”) have been paid (unless RMDs under your defined contribution plan have been waived for 2020).

If your 401(k) plan failed ADP/ACP* nondiscrimination testing for 2019 and you did not process all corrective distributions by July 15, 2020 (the extended COVID-19 deadline), process all remaining corrective distributions and report the 10% excise tax on Form 5330.

Confirm that all necessary remedial actions to address and correct any operational errors identified during the 2020 plan year have been fully implemented, funded, and memorialized with appropriate documentation.

Process corrections if your cafeteria plan, healthcare flexible spending accounts or dependent care flexible spending accounts failed nondiscrimination tests under Code Sections 125 or 129 for 2020.

For calendar year retirement plans and health and welfare plans, adopt amendments reflecting discretionary changes to the plans’ terms or design that were implemented in 2020, but not yet memorialized in writing, or changes that will take effect in 2021, but that must be adopted before implementation.

For publicly traded companies that wish to eliminate nonqualified deferred compensation plan provisions requiring a delay in payments if the company reasonably anticipates that the payment will be disallowed under Code Section 162(m), adopt an amendment eliminating the required delay, without resulting in either an impermissible acceleration or a material modification of a grandfathered plan under Code Section 409A. (Read more here: Section 409A Meets 162(m) and Some NQDC Plans May Need to be Amended by December 31)

Other Items That May Require Action

Prepare and distribute an annual fee disclosure to all participants in your defined contribution retirement plan. This must be furnished to participants (and eligible non-participants, beneficiaries with account balances, and alternate payees) at least every 14 months. If you are unsure of when fee disclosures were last distributed, consider sending a fee disclosure with your year-end 401(k) and 403(b) notices.

The IRS notifies employers of shared responsibility tax penalties under the Affordable Care Act in the form of a Letter 226J. If you receive a Letter 226J, you will have the opportunity to respond before the IRS assesses the penalty. The Letter 226J includes instructions on how to respond; however, keep in mind that the response is typically due within 30 days of the date of the Letter 226J, unless an extension is requested and approved.

The Further Consolidated Appropriations Act, 2020 reinstated PCORI** fees for an additional 10 years. For plan years that end on or after October 1, 2019 and before October 1, 2020, the PCORI fee payable by health insurance issuers and sponsors of self-insured health plans will be $2.54 per covered life (up from $2.45).

Confirm that your payroll department, or your third-party payroll provider, has adjusted their systems to reflect changes in various wage and benefit limits for 2021, including the following:

  • The Social Security wage base increases to $142,800.
    • The monthly limit for tax-exempt parking benefits and transit passes/van pool service benefits each increase to $270.
    • The maximum contribution to a Health Savings Account increases to $3,600 for individual coverage, and $7,200 for employee +1 coverage.
    • Any increase to retirement limits that the IRS announces before the end of 2020.

*Actual Deferral & Actual Contribution Percentage Tests

** Improving Outcomes Important to Patients. www.pcori.org

#deadlines #2020 #benefitplans #HR #humanresouces

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through Lion Street Advisors, LLC (LSA) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI and LSF/LSA are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.

Unless otherwise noted, VAI/VSI, LSF/LSA are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

Lion Street Advisors // Lion Street Financial

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