Whether you’re an employer or an employee, setting up a 401(k) plan is not only a great way to prepare for retirement, but also a wonderful source of tax advantages! To maximize the benefits of your workplace 401(k) program, you have to keep in mind deadlines for key events, including taking required minimum distributions and for launching a safe harbor 401(k) plan (one of the most common 401(k) plan types).
Here’s a comprehensive list of 401(k) deadlines for employers and employees, including action items and links where you can find additional information. This may seem like an intimidating list, but keep in mind that Human Interest can help you understand and meet all of these deadlines. 401(k)s are important to your business and employees, but they don’t need to be stressful!
401(k) Deadlines for Employers in 2018
January 1: Start of safe harbor 401(k)
A safe harbor 401(k) plan is a type of tax-deductible 401(k) plan that ensures all employees at a company have some set of minimum contributions made to their individual 401(k) plans, regardless of their title, compensation, or length of service.
If you have an existing, regular 401(k) plan, you cannot add safe harbor to it in the middle of the year. January 1st is the date on which existing 401(k) plans can begin anew as safe harbor 401(k) plans. If you follow the deadlines in the links below, you can take the right steps to have it launched for the following year.
January 15: Prior year census data
The administrator of the 401(k) must provide the prior year’s census data to the plan’s recordkeeper, which contains pertinent information for each employee at the company including:
- Date of birth
- Date of hire
- Termination date (if applicable)
- Hours worked
- Compensation and amounts contributed to the 401(k) during the year
The recordkeeper uses this census data to complete compliance testing for guidelines from the U.S. Department of Labor (DOL) and the IRS.
January 31: Issue Form 1099-R
Deadline for sending Form 1099-R to plan participants who received distributions during the previous year.
Learn more: About Form 1099-R
February 28: File Form 1099-R
Deadline for filing Form 1099-R with the IRS to report the plan distributions made in previous year. Note: The deadline for electronic filing of Form 1099-R is March 31.
March 15: Corrective distributions
Deadline for processing corrective distributions for failed prior year actual deferral percentage (ADP)/actual contribution percentage (ACP) tests without a 10% excise tax. IRS Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, is required.
A special deadline may apply to plans that are vategorized as an eligible automatic contribution arrangement (EACA). See the June 30th deadline below.
March 31: Complete form 5500 & file Form 1099-R electronically
File IRS Form 5500 with the Department of Labor to satisfy the required annual reporting under ERISA. The service provider typically prepares the Form 5500, the recordkeeper fills out the questionnaire, and the plan manager signs the form.
Learn more: Form 5500 Series
If filing Form 1099-R electronically, March 31st is also the deadline to report distributions made last year.
April 15: Tax Day
Today is a big day! Not only you have to file your federal tax return (and your personal taxes), but you also have to process corrective distributions for IRC Section 402(g) excesses.
Also, today is the last day to fund your employees’ accounts and still receive a tax deduction for the prior tax year. Employers can receive tax benefits for contributing to 401(k) plans too – the tax code wants to encourage saving for retirement, so employers are offered tax incentives to contribute, as well as to offset the cost of setting up retirement plans.
One of these incentives is the Credit for Small Employer Pension Plan Startup Costs, a tax credit that can reduce your tax liability by up to $1,500!
June 30: Keep an eye on the special deadline for correcting distributions (for EACA plans)
For plans containing an automatic enrollment feature that satisfies certain requirements: Form 5330 and the excise tax don’t apply until after the first 6 months after the end of the plan year, which is June 30.
Learn more: EACA FAQs
September 30: Distribute Summary Annual Report to plan participants
The Summary Annual Report (SAR) is a narrative summary of the plan’s financial status and summarizes the information on the plan’s annual report.
According to the IRS, the SAR should include the following:
- Administrative expenses incurred by the plan
- Amount of benefits paid to participants and beneficiaries
- Total value of plan assets
- A pension plan’s compliance with the minimum funding standards
- Right to receive a copy of the full annual report, or any part thereof
The SAR is provided on the the latter of these two dates: nine months after the end of the plan year (September 30th) OR two months after the SAR is due (if an extension has been granted by the IRS).
October 1: Launch a new safe harbor 401(k) plan
For the first year of a new safe harbor plan, the safe harbor plan must be in effect for a minimum of 3 months, which is why October 1st is the deadline to launch.
November 2: Issue SIMPLE 401(k) notices
Give SIMPLE 401(k) plan notices to eligible employees to notify them of their next year’s salary reduction rights and whether the employer required contributions will be matching or nonelective contributions.
Early in November: Plan ahead for required December 1st notices
There is a December 1st deadline for employee notices (more on that below!) that determines two November deadlines:
If you have an existing safe harbor plan and would like change the type of safe harbor (example: safe harbor enhanced match → safe harbor non-elective), this must be decided prior to December 1st so that the notices can distributed by December 1st.
If you have an existing 401(k) plan that’s not safe harbor, to amend your IRS plan documents to enact a safe harbor 401(k) plan for the following calendar year, you must let your provider know prior to December 1st.
Other required notices include qualified default investment alternative (QLDIA) and automatic contribution arrangement notices. For administrative ease, a combined notice covering all notices may be provided.
December 1: Issue safe harbor plan notices
Today is the date by which all safe harbor plans, both new and old, must have distributed a notice to their employees. The rule is at least 30 days before the first day of the year, so for a plan that will be safe harbor in 2019, December 1st, 2018 is that date.
December 31: Important 401(k) must-do’s before year-end
- Correct a failed ADP/ACP test with qualified nonelective contributions.
- Distribute prior year’s 401(k) excess contributions and excess aggregate contributions (both adjusted for prior year’s income and losses).
- Set up a qualified retirement plan for the current year. Remember that you can’t have retroactive elective deferrals!
- Distribute current year RMDs (you have until next year’s April 1 to pay the first RMD for a participant who turned 70½ in the current year for a participant, other than a 5-percent owner, who retired in the current year).
- Amend plan documents if you wish to convert existing 401(k) plan to a safe harbor design for next plan year.
- Amend plan documents if you wish to remove safe harbor status for next plan year.
401(k) Deadlines for Employees in 2018
January 1: Start contributing towards current year’s limit
This is the first day that you can start contributing to your 401(k) for the current year. The sooner you the start, the more you can spread out your contributions across more paychecks (as opposed to attempting to max out with just a few paychecks left in the year). The contribution limit for 2018 is $18,500 ($24,500 if age 50 and over), so it’s never too early to get started!
April 1: Keep in mind those RMDs
Required beginning date to start taking required minimum distributions (RMDs) for those reaching age 70 1/2 or retiring after age 70 ½ in the prior year.
April 15: File federal taxes
Unlike in previous years, Tax Day 2019 falls right on April 15th. If you’re expecting a bonus or commission check from your employer for prior year performance and would like to stash it away on your 401(k), you can only wait until that day for that employer contribution to take place. Plan ahead to maximize your nest egg.
June 15: Don’t forget about that extension deadline
Two-month filing extension deadline for federal taxes. Remember that if you owe taxes to Uncle Sam, interest applies.
Sometime between October 1 and November 1: Open enrollment begins
Your employer will start announcing the start of the open enrollment period to choose your workplace benefits for the next year. If you haven’t set up your 401(k), now it’s the time to do so. You can only sign up for your employer’s 401(k) during the open enrollment periodat they determine, which is usually at the end of the year, unless you go through a major life event, including marriage, birth of a child, or death of a spouse. At Human Interest, we’re able to allow employees to sign up at any point in the year, no matter when they joined the company.
Need help understanding FSAs? Review Beyond an FSA: Dependent Care, HSA, Adoption, and More
The last day to take RMDs from your 401(k) (and IRA, if applicable).
Also, today is the last day to set up your 401(k) so that eligible contributions count towards the current year. As mentioned earlier, this is key when expecting a commission or bonus from your employer at the beginning of the next year. If you want that potential employer contribution count towards the year that is about to end, you need to act right away.
As the year draws to a close, year-end financial planning may not seem like a priority. However, getting all of your home finances in order now will help set you up for success in the new year. Here is a helpful checklist of 7 End of Year Financial To-do Items.
The Bottom Line
Both employers and employees receive tax benefits for contributing to a 401(k) plan. Employees can build their nest eggs tax-free, while employers enjoy tax credits and write-offs, lower employee turnover, and a more productive workforce. If you’re a small business, a low-fee retirement program can benefit your employees and your bottom line.
If you’re looking for a 401(k) provider that will help make sure you’re covered on all of these deadlines, click here to request more information about Human Interest.