Important regulatory dates to keep in mind

The Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) contain many important requirements for defined contribution plans that occur either during the calendar year or during the plan year.

The Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) contain many important requirements for defined contribution plans that occur either during the calendar year or during the plan year. Some examples include participant statements, nondiscrimination and compliance testing and remittance of plan contributions. Here are upcoming key events which must occur within the specific deadline for a calendar year plan, although not intended to be exhaustive, this article highlights upcoming deadlines and can be used by employers to monitor compliance over the plan.

 

For 401(a) and 401(k) defined contribution plans

MARCH

15th - ADP/ACP Annual Nondiscrimination Testing – To determine if employee deferrals (ADP Test) or employer matching contributions (ACP Test) meet nondiscrimination requirements, the applicable test(s) must be completed and corrected (if failed) within 12 months after the end of the plan year. However, to avoid an Internal Revenue Service (IRS) 10% excise tax, testing must be completed and any excess amounts must be distributed by March 15 for plans operating on a calendar year.  (Plans with a 12-month plan year other than the calendar year must distribute the excess within 2 ½ months after plan year end to avoid the IRS 10% excise tax).

For a plan with an Eligible Automatic Contribution Arrangement (EACA) provision that covers all eligible employees,the ADP/ACP test must be completed and corrected (if failed) within 12 months after the end of the plan year. However, to avoid the IRS 10% excise tax, testing must be completed and any excess amounts must be distributed within by June 30th for plans operating on a calendar year.  (Plans with a 12-month plan year other than the calendar year must distribute the excess no later than the end of the 6th month after plan year-end).

APRIL

1st - First required minimum distribution (RMD) payment.  A plan participant must begin to take RMD by April 1st of the calendar year following the later of: (a) the calendar year in which the employee attains age 70 ½, or (b) the calendar year in which the employee retires from the employer (unless otherwise directed by the plan document).  However, If the plan participant is a  5% owner of the employer sponsoring the plan, the first RMD must be taken by April 1st of the calendar year following the calendar year in which the employee attains age 70 ½, even if the participant is still employed by the plan sponsor.

16th - Return of excess elective deferrals (plus related income) for the 2017 plan year.  The elective deferral limit for 2017 was $18,000 and increased to $18,500 for 2018.

 

For 403(b) plans

MARCH

15th - ACP Annual Nondiscrimination Testing – Generally, applicable to 403(b) plans subject to ERISA with matching contributions.  To determine if employer matching contributions meet nondiscrimination requirements, the ACP test must be completed and corrected (if failed) within 12 months after the end of the plan year. However, to avoid an Internal Revenue Service (IRS) 10% excise tax, the ACP test must be completed and any excess amounts must be distributed by March 15 for plans operating on a calendar year.  (Plans with a 12-month plan year other than the calendar year must distribute the excess within 2 ½ months after plan year end to avoid the IRS 10% excise tax).

Generally, for a 403(b) plan subject to ERISA with an Eligible Automatic Contribution Arrangement (EACA) provision that covers all eligible employees,the ACP test must be completed and corrected (if failed) within 12 months after the end of the plan year. However, to avoid the IRS 10% excise tax, testing must be completed and any excess amounts must be distributed within by June 30th for plans operating on a calendar year.  (Plans with a 12-month plan year other than the calendar year must distribute the excess no later than the end of the 6th month after plan year-end).

APRIL

1st-   First required minimum distribution (RMD) payment.  A plan participant must begin to take RMD by April 1st of the calendar year following the later of: (a) the calendar year in which the employee attains age 70 ½, or (b) the calendar year in which the employee retires from the employer sponsoring the plan. 

16th-   Return of excess elective deferrals (plus related income) for the 2017 plan year.  The elective deferral limit for 2017 was $18,000 and increased to $18,500 for 2018.

 

For all 457(b) plans

APRIL

1st-   First required minimum distribution (RMD) payment.  A plan participant must begin to take RMD by April 1st of the calendar year following the later of: (a) the calendar year in which the employee attains age 70 ½, or (b) the calendar year in which the employee retires from the employer sponsoring the plan. 

 

For 457(b) plans sponsored by nonprofit organizations

APRIL

16th-   Return of excess contributions (plus related income) for the 2017 plan year.  The annual contribution limit for 2017 was 100% of compensation up to $18,000 and the dollar amount increased to $18,500 for 2018.  

 

IRS Circular 230 Disclosure

Any tax discussion contained in this communication was not intended or written to be used, and cannot be used by the recipient or any other person, for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on such person. Any tax discussion contained in this communication was written to support the promotion or marketing of the transactions or matter discussed herein. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

 

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

For Plan Sponsor use only. Not for public distribution. CN0227-40423-0319D