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Hunter Benefits Consulting Group

Plan Sponsor 101

Client Annual Checklist

This page shows everything you may need during the plan year to maintain a healthy plan. Each item has a brief description, an explanation of why you need it, and an action item of what you need to do.

Watch for a walkthrough of this page.

  • What are they? Assets are the plan’s investments plus any money that the plan expects to receive (receivable contributions to be deposited after the end of the plan year). The assets show the total value of the Plan and Trust. 
  • Why are they important for Defined Contribution (DC) plans? The assets in the plan must be reconciled to make sure that all the funds are in the right account for each participant and in the right source. The assets are not reconciled at the individual investment level. 
  • Why are they important for Defined Benefit (DB) plans? The total value of the assets in the plan, either at the beginning or at the end of the year, affects how much money the plan needs to contribute. Therefore, the assets in the plan must be reconciled to make sure that all the deposits and withdrawals have been recorded correctly. 
  • How do we get them? In most cases, we can download the assets directly from your recordkeeper. In some cases, you may need to give us copies of the asset statements. 

  • What is it? The Annual Questionnaire is a list of questions that ask for information that we can’t get from the employee census or from the company that manages your plan’s assets (recordkeeper). The questions are different for different types of plans, so please follow the “skip ahead” instructions carefully. 
  • Why is it important? The Annual Questionnaire helps us track any changes in your company that may affect your plan. For example, changes in ownership or the amount of discretionary money you want to contribute to your plan. 
  • How do you complete it? You need to fill out the online form and submit it to us. 

  • What is it? The Employee Census is a list of ALL W2 employees who worked or were paid during the year (your Plan Year). 
  • Why is it important? The Employee Census gives us the information we need to make sure your plan follows the rules and regulations (compliance work). For example, we need to know who can join the plan, who can’t, who earns more than a certain amount (Highly Compensated Employee), who owns part of the company (Key Employee), and so on. The list must include all employees, even those who are in a union or not eligible for the plan. This is a good time to check your payroll records and make sure everyone’s status is correct. 
  • How do you provide it? You need to fill out our template correctly, or give us direct access to the data from the company that handles your payroll. Please note that if your plan document defines compensation as being from plan entry, we will need full year and eligible compensation for that employee. 

  • What is it? The ERISA Fidelity Bond is an insurance policy that the Employee Retirement Income Security Act (ERISA) requires you to have. It covers at least 10% of the value of your plan’s investments and money (assets). 
  • Why is it important? The ERISA Fidelity Bond is a cheap way to protect your participants’ account balances in the event of theft or fraud. 
  • How do you get it? You need to buy the ERISA Fidelity Bond. We will ask you for the coverage details in the Annual Questionnaire. You can usually add this to your existing property and casualty insurance policy.   

  • What is it? The Form 5500 is an information form that the Internal Revenue Service (IRS) requires you to fill out and submit online to the Department of Labor (DOL). It is available to the public and shows how your plan is doing. You need to submit it within 7 months after the end of your plan year. 
  • Why is it important? The Form 5500 is a key tool that the IRS and DOL use to check if your plan follows the rules and regulations (compliance). Submitting the Form on time starts the clock for the Statue of Limitations, which limits how long the IRS and DOL can audit your plan. Submitting the Form late can cost you a lot of money in penalties. 
  • How do you complete it? You need to register with the DOL for signing credentials, if you haven’t done so already. (The credentials are personal for you and don’t depend on where you work or who prepares the Form 5500.) If you don’t have the credentials, click here to get started. You also need to make sure that we have all the data we need to prepare a complete and accurate Form 5500. We will then prepare a Form 5500 for you to submit online. 

  • What are they? Distributions are payments that you need to make to some of your participants from the plan. We will give you a list of participants who need to get paid by certain dates. One list will have participants who have less than $5,000 in their account that belongs to them (their vested account balance) – if any. The other list will have participants who are older than 72 and must take a minimum amount from their account every year (Required Minimum Distribution) – if any. 
  • Why are they important? Your plan’s rules (Plan Document) say that you must pay out participants who have a vested account balance of less than $5,000. They can choose to take the money, but if they don’t, you must move their balance to a separate account that is not part of the plan (an Individual Retirement Account or IRA). Participants who are older than 72 must take some of their money as a taxable payment every year. They can’t move this money to an IRA. 
  • How are distributions paid? You need to follow the instructions that we give you to make sure that you pay the right amounts to the right people on time. Please remember that we are here to help if you have any questions or problems. 

  • What is it? A Large Plan Audit is a review of your plan’s financial statements by a qualified outside accountant. It is NOT the same thing as being audited by the Internal Revenue Service (IRS) or the Department of Labor (DOL). You need a Large Plan Audit if you have a “Large Plan”. A “Large Plan” has more than 100 participants with account balances in your plan. If this is a new plan, you count the participants on the last day of your plan year. If this is not the first year of your plan, you count the participants on the first day of your plan year. It doesn’t matter if the participants are still working for you or not, as long as they have money in the plan. 
  • Why is it important? It is an extra part of the Form 5500 that you need to submit to the IRS and DOL every year. The Form 5500 shows how your plan is doing and if it follows the rules and regulations (compliance). 
  • How is this accomplished? You need to hire a suitable accountant to do the audit every year. If you don’t know where to start, we can help you with some suggestions. Most of the auditor’s work will involve dealing with you directly. We will try to help the auditor as much as we can when possible. 

  • What are they? Annual Notices are documents that you need to give to all employees who will be in the plan on the first day of the following plan year. The notices tell them about their rights and responsibilities in the plan. You need to give them the notices between 60 and 30 days before the start of your plan year. Some of these notices come from us and some come from the company that manages your plan’s assets (recordkeeper). 
  • Why are they important? The Annual Notices help you keep your plan in line with the rules and regulations (compliance) from the Internal Revenue Service (IRS) or the Department of Labor (DOL). 
  • How are they provided? You need to make sure that you give the notices from us and from your recordkeeper to your employees on time. Each recordkeeper has a different way of giving you the notices or sending them for you. If you want us to help you with this for an extra fee contact [email protected].  

  • What is it? An Actuarial Certification is a document that a qualified actuary signs to confirm the minimum, maximum and recommended contribution amount for your plan each year. 
  • Why is it important? Defined Benefit and Cash Balance Plans are types of plans that let you provide large benefits and tax deductions for yourself and your employees. The tradeoff for the big deductions is that you need to make sure that your contribution fits within certain rules and standards (funding criteria). 
  • How is this done? The only extra thing you need to do is to fill out and send the actuary’s deposit contribution form on time. 

  • What is it? PBGC stands for Pension Benefit Guaranty Corporation. It is a federally chartered corporation that provides an insurance program to protect pension based retirement benefits. 
  • Why is it important? It is required for most employers. You don’t need it if you are the only owner and employee of your business, or if you are a professional (doctor, attorney, accountant, architect, etc.) with less than 25 employees in your plan. Everyone else does. 
  • How do you pay it? You need to have your own PBGC log-in credentials. If you don’t have them yet, click here. That’s where you will pay the annual PBGC premium, which is based on the number of participants and the amount of money in your plan. The actuary will tell you how much the premium is. 

  • What is this? Deductions from employee pay are per payroll according to the employee’s deferral elections. (Pre-Tax 401(k) and/or Roth after-tax 401(k)). 
  • Why is this important? This is how the plan is funded. The Department of Labor requires qualified retirement plan employee deferral deposits to be made within 7 business days from payroll, and for large plans with 100+ participants, the requirement is 1 business day from payroll.  
  • Client’s responsibility for active elections. The plan sponsor is obligated to ensure that the payroll deductions and deposits to the plan are correct, match the participant’s deferral election and are made timely. 
  • Client’s responsibility for passive (Auto-Enrollment) elections – Ensure new participants are provided with the correct notices timely and that deferrals start on time. Watch for annual auto increase amounts for those who are auto-enrolled (if applicable). The IRS/DOL has strict rules regarding auto-enrollment, and it is expensive to correct.  

  • What is this? Several types of employer contributions are outlined in the plan document (some or all may apply). The contribution deadline depends on your Entity type (Sole Proprietor, Partnership, S Corporation, C Corporation, etc.), plan document specifications and tax return extensions. 
  • Safe Harbor – Mandatory employer contributions, calculated using a formula, and can be made per payroll or plan year according to your plan document. Usually 3% for all eligible employees or a 4% match for those who are deferring.
  • Employer Non-Elective (Profit Sharing) – Discretionary employer contributions that must pass IRS-required compliance testing. Allocations are typically provided after the plan year’s end to ensure testing passes. The plan document details the formula and requirements for the allocation.
  • Match Contributions – Discretionary employer contributions calculated on a specific formula dependent on the employee’s deferral rate. Allocations can be made per payroll or plan year according to your plan document. The plan document details the formula and requirements used for the allocation.
  • Cash Balance (DB Only) – is a mandatory employer contribution made under a Cash Balance plan. These contributions are calculated using a specific formula determined by the plan document and tested by the actuary each year to ensure testing passes. 

  • What is this? An optional, extra-cost service if you would like to have an idea of what your minimum or optimum contribution amount would be, or whether or not you’re going to pass the 401(k) non-discrimination test.
  • Why is it important? This can help you budget and plan your cash flow needs.
  • How is this accomplished? At any point in the plan year, or when you see the twice yearly email, let your consultant know that you’d like this done. They will work with you to determine what data is necessary and to discuss what you would like tested.