LAST REVIEWED Feb 17 2020 10 MIN READ
The end of the year is approaching quickly, which means there are deadlines related to health care, payroll, and retirement investment plans that you need to plan for before the holidays start approaching! If small business owners and HR managers prepare for these filing requirements throughout the year, the final months of the calendar year will be much less stressful. We have a few suggestions for making the end of this year and the beginning of next year a little less hectic! For clarity purposes, we’ll be referencing 2016 (this year) and 2017 (next year) for specific deadlines, but most of these deadlines apply every year, so this is something you should revisit annually!
Prepare Affordable Care Act (ACA) reporting documents
As of January 2016, employers are required to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered. The fundamental purpose of these documents and reporting is to demonstrate that health care coverage was offered to all eligible full-time employees. Employers with fewer than 50 full-time employees and a self-insured plan must file forms with the Internal Revenue Service (IRS). This page on the IRS website provides information about which forms are required, depending on the size of the company (1095-B and 1094-B for businesses with fewer than 50 full-time employees). The Society for Human Resources Management (SHRM) provides a helpful summary of what employers need to do, including these important dates for the 2016 Tax Year ACA Reporting Deadlines:
January 31, 2017: Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met).
February 28, 2017: Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met).
March 31, 2017: Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. (Any employer filing more than 250 information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.)
Source: 2017 ACA Information Reporting: Prepare Now for Earlier Deadlines, SHRM To make this process easier in January, establish a process to track the dates throughout the year that coverage was offered to each employee and also record when or if employees waived that coverage. Review 1094 and 1095 instructions to be sure that you’re collecting the information you need and that it’s easily accessible.
Get ready for your final few payroll cycles this year and prep for next year
Before you issue the final payroll of the year, it’s important to ensure that all records are up-to-date. Verify the employer and employee data that is used in processing your quarterly tax reports and W-2s, including:
Employee names and Social Security numbers are in the correct format (the IRS may impose a penalty for each Form W-2 with a missing or incorrect Social Security number or employee name.
Proper withholding has been made for taxable fringe benefits (e.g., for bonuses, third-party sick pay, etc.). If not, it needs to be withheld from the final paycheck for taxable fringe benefits.
Employee W-4 is current and up-to-date (remind all employees to fill out a new Form W-4 if their situation has changed).
Finally, make sure that you’re ready to complete and distribute W2s and 1099s to employees by January 31, 2017.
Make sure 401(k) notices are ready
If you currently have a 401(k): The 401(k) plan sponsor is responsible for ensuring that its plan is in compliance and must also meet IRS filing requirements. If the required returns aren’t filed, or if they are filed late, penalties may apply. After October 3, 2016 and before December 1, 2016, plan administrators must provide safe harbor notices to participants and beneficiaries if the plan is expected to use safe harbor ADP/ACP testing for the 2017 plan year. The following notices are also due:
Check with your 401(k) provider to see if they’ll help you with any of these or other required forms!
Unlike with IRAs, 401(k) contributions must be made within the calendar year for tax purposes. This means that you should remind your employees that if they’re looking to contribute as much as possible to their 401(k)s, they need to calculate how much they’ll need to contribute for the remaining paychecks before December 31, 2016. If you don’t currently have a 401(k) and you want to squeeze in some contributions this year: You must sign up for a 401(k) by early November to try to fit in at least one December pay cycle this year. If you don’t currently have a 401(k) and you want your employees to be able to start contributing early next year: January 1st is a great start date for a new 401(k) for accounting and contribution maximizing purposes. If you want to be able to offer a 401(k) for the maximum number of pay periods next year, sign up in early December to get this taken care of before the holiday rush — the sooner, the better, and you’ll feel less rushed about getting all of your ducks in a row. Sign up here to request more information about Human Interest (which takes care of all of the notices above!) if you’re interested in starting a new 401(k) plan or switching over to our services.
Remind employees about remaining funds and vacation days
For this year:
Remind employees to spend any remaining flexible spending account (FSA) balances before the end of the year to avoid forfeiting any leftover funds.
Inform employees if they have any paid time off they must use before December 31 to avoid losing any accrual or carryover balances. (Note: confirm state laws to ensure what’s allowed for forfeiture of accrued paid time off.)
For next year: Prepare your company’s calendar of holiday observances so that you can send it out right at the beginning of January. This will help employees figure out their vacation schedules for the year in advance, which makes life easier for everyone involved!
Miscellaneous year-end check-ins
Make sure to plan a few months in advance every year to save yourself from last-minute scrambling and unnecessary stress to handle all of the deadlines above. The end of the year is also a great time to check in on the more holistic, personal parts of HR like employee happiness, compensation, retention, benefits, etc. As your employees wrap up another year of work, it’s a convenient time to have them reflect on their satisfaction levels and think about room for growth. You’ll need to remind them of all of the organizational and paperwork-related deadlines in Q3 and Q4, but you should also take a bit of extra time to open up the lines of communication for them to submit any requests or suggestions for HR-related initiatives for the upcoming year! Are you a business owner or CEO running HR by yourself? Check out these articles as well:
The Human Interest Team
We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.