This is a timely reminder for all clients with 401(k) plans that have fixed entry dates—typically January 1st and/or July 1st.

As you know, employees generally become eligible to participate in your retirement plan after completing one year of service. If any of your employees became eligible after your last entry date (e.g., since January 1st), they may now be due to enter the plan as of July 1st.

It is critical to identify all such employees and ensure they are offered the opportunity to enroll. This includes:

• Notifying eligible employees
• Completing plan documentation and deferral elections
• Updating your payroll provider to begin appropriate deductions and employer contributions
• Notifying your pension administrator or actuary

Please also ensure any necessary retroactive contributions or adjustments are handled accurately and promptly. Missing an enrollment window can lead to compliance issues and potential penalties, so we strongly encourage you to review your employee records and coordinate with your plan administrator if assistance is needed.

In addition, a few key compliance reminders:

1. Always obtain employees’ deferral instructions in writing.
2. Any changes to deferral elections must also be requested in writing.
3. Once 401(k) deferrals are deducted from payroll, it is mandatory to fund those amounts into the pension account within 7 days of the deduction. Timely remittance is critical to avoid violations.

Finally, it is not a bad idea to send a blanket email to all employees every six months reminding them of the plan and their options.

Reach Out