With 2023 on the horizon, our Director + 401(k) Audit Kim Moore and Manager + 401(k) Karen Hill discussed end-of-year activities that 401(k) plan sponsors/administrators should be doing to prepare for the upcoming year. These tips will help plan sponsors stay organized and avoid going into compliance or otherwise opening your organization up to potential late penalties and fees.
Summit CPA Group has merged with Anders CPAs + Advisors! Visit our website to learn more about our 401(k) process and pricing: https://anderscpa.com/401k-audits/
“Getting that [third-party administrator] questionnaire turned around quickly is really important, as well as if the provider's asking you for some type of year-end payroll report, a census, those are terms we see a lot. That is going to get folded into the discrimination testing that your service provider's going to do, and that's very important that that gets done, that it's accurate and that it's timely.”
Topics discussed in this episode include:
Episode resources
Kim Moore: Hello everyone. Welcome to the 401K Audit, CPA Success Show for this month's podcast.
This is Kim Moore with Summit CPA Group at Division of Anders, and I have Karen Hill, the audit manager here with me as well. So welcome to our podcast. I'm gonna start the podcast today by, by doing what I usually do at the end and throwing out if you have a suggestion for the podcast. If you have any questions, something you'd like us to cover that we haven't covered before, have a question on, on a topic that we have covered.
Feel free to reach out. You can reach out directly to me. My email address is letter K. Moore, it's K then m o o r e at Anders, a n d e r s cpa.com. Again, that's K Moore at Anders with an s cpa.com. So feel free to reach out if you have any questions or suggestions for a future podcast or if you'd just like to reach out, we'd like to get in touch with any of our viewers.
Karen, this topic for this year. We are recording this podcast here the beginning of November. So we just passed Halloween. Looking forward to all of the holidays coming up, and I know it's busy time in the office for everybody as you're trying to manage getting stuff done and holidays and probably some vacation time and all of that.
But we don't wanna forget all the stuff that we need to do for. Our 401k plan, if you are the plan administrator, plan sponsor, plan trustee for a plan. We thought we'd spend a little bit of time today talking about year end, so planning for things you need to do to kind of wrap up for the year, and then things you need to do to prep for What, what are year end activities, but they'll actually happen in the first part of, the following year, which will be the beginning of 2023 for us.
First, first thing I had, which is near and dear to our heart, is I'm like, I need an audit . So, uh, you know, when I, when I was preparing for this, I put some notes together. Obviously that was first thing that came to my mind. Things that consider here. First off, are you gonna need an audit? So if you are, if you've never had an audit before, maybe didn't even know that you, there was such a thing as an audit, what drives that is the number of participants in the plan.
And that's, you need to consider three numbers when you're trying to come up with that total number. Obviously anyone that's in the plan, participating, having with, deferrals, they would be included in that count. Anyone that's in the plan remain. They've terminated employment, but they left their dollars in the plan, so they still have an account with the plan.
They would be included in the account. You also need to include anyone who's eligible to participate, but maybe has elected not to participate. So someone who was eligible but chose not to participate or gave you a decline form said they didn't wanna. Out of all those numbers, um, generally if it's over a hundred, you need an audit.
There's something called an 80 120 rule. So if you're between the 100 -120 and you filed a short form, 5500 the prior year, you still can file under short form until you go over that 120. So generally, definitely once you get over 120, you need an audit, So, first, first thing I would say is if you have never had an audit, getting to your end, check your, you know, those numbers.
So check what's in the plan currently, check your payroll. You can talk to your service provider and they can help you out, there too, if. You know, you're, you're one, you're getting close. So if you're thinking, Oh, I'm right around 98, 99, or I'm at that 119, 118, then, you know, that's, that's when you, you want to, be checking with your service provider.
Oh, we almost had a guest. See, that's what happens when you, when you work from home, you, you get guests, you unexpected guests sometimes.
Karen Hill: Yeah. She, she realized quickly we were recording.
Kim Moore: See, and that's what can happen when you're, when you're getting close to those numbers unexpectedly, one more person joins and now you're over your one 20.
And yes, that's, that's what can happen. So that's why we recommend that if you. I mean, if you're sitting at, I have 20 employees, 40 employees, probably not. You're probably not gonna gain that many. It's probably not an area that you need to worry about. But if you're getting close, you're getting up in the nineties or you're into the hundreds, an area that you know you wanna be considering.
If, if you are thinking you're gonna flop over that one 20, you're gonna need an auditor. It is best. And we e encourage everyone to start researching auditor selection early, audit firms, their schedules fill. Really quickly, there, there's getting to be fewer and fewer auditors that do benefit plan audits.
So it's really important, to get started. Don't wait till last minute, say, Oh, I got plenty of time. You really don't. So to get started, as, as early as possible. I also like to bring this up at the end of the year because most people are putting together their budgets. For next year. Obviously you'd wanna budget for an.
Audit fees that can vary, obviously, depends on the firm, depends on the complexity of your plan. First time audits tend to cost a little bit more, just because it is that first time audit. So again, another reason to start researching early so you'll know the amount that, that you need to, budget.
Also we have on here begin gathering documentation, for your audit, that would be your general documents, things like your plan document. You wanna make sure that you're keeping your year end payroll information. That's gonna be very important. If your HR documentation isn't all put together, you want to maybe do a real quick check on that and make sure that, that, that stuff's all kind of put together in, in good order, because those are the areas primarily the charters are gonna focus on is HR, payroll and the plan documentation.
So, so, if you got a little extra time here at year end, or maybe you've got somebody that's, helping you out, as you're getting ready for year end, that might be, a task that you can give to them. Another thing I wouldmention is if you have been having audits, now's a good time to be thinking.
Do you wanna continue with that auditor that, that you've been using? Most folks do they, they find an auditor and they'll stick with them. Cuz it can get expensive and, and can eat up a lot of extra time to switch firms. But maybe your auditor is gonna retire or they've told you. They're not gonna be able to do your audit next year for whatever reason.
Again, now's time to get started, on the, on that search. I don't know, Karen, anything else you can think of on the, on the audit or topic?
Karen Hill: No. No, not really. Nothing I can think of.
Kim Moore: Okay. It's, you know, obviously something near and dear to us, but, it, it does take time, especially if it's your first audit or you're switching auditors.
In either case, it does take time to find a new auditor and get your stuff ready.
Karen Hill: And so I would say-
Kim Moore: Yeah, like plan early.
Karen Hill: I guess the one thing I would add is make sure you start at that process early, because you're gonna have a lot more flexibility on what time, the timeframe on of getting your audit completed, if you engage somebody earlier on in the process rather than waiting till late because if you wait until July, they might not have much capacity at that point. And you might have to just take, I mean, if it's a brick and mortar, operation that'll come out to your, your workplace and conduct the, the audit on site, you're gonna, might be limited on what their availability is to do that.
Kim Moore: Yeah, absolutely.
And there's different options. Obviously we've, we've done other podcasts about selecting auditors and that, so if you find yourself into this situation, you might wanna check out some of those previous podcasts, or, or drop me a note and I'll, I'll be throwing my email out again at the end of the podcast.
Drop me a note. Be happy to, send you some materials. We have a couple booklets on selecting an auditor from both the Department of Labor and the A I cpa, which is the governing body for, accounting firms. So both of them have put out nice little easy to read short booklet about things to consider as you're selecting your auditor. So, If that comes out for you, just drop me a note and be happy to, to share those with you.
Karen, another thing as we get to the end of the year is fidelity bond.
Karen Hill: Yes.
Kim Moore: What's your thoughts on that?
Karen Hill: Well the plan assets need to be covered by a fidelity bond, and they measure the bond based on the beginning of the year assets.
So, for 2022, you would wanna look at what were your plan assets on January 1st, 2020. For that 2022 audit, and the general rule rule is it's 10% of the plan assets up to a maximum of $500,000. There is a minimum $10,000 as well if it's really small, but usually if you're need an audit, your assets are gonna be well over the minimum amount that you would need up, like I said, up to, $500,000.
You wanna make sure that you have, Cause we, we've had cases where clients have had a bond, but they haven't had it with an approved surity. And there is a website on the IRS. The IRS website. You can go in and you can look and they have a listing of all the companies that are approved to, to, to carry these bonds.
And you also wanna make sure that if you do have already have a bond, make, make sure that you have it renewed and that if you renew it and you don't have a built in some, sometimes they have a, a built in. Um, and I'm going to the wording as...
Kim Moore: Escalation
Karen Hill: Escalation. Yes. They have an, yeah, they have an escalation clause in there. Whereas if you said, Okay, well I only need $200,000 when I started, when I first got the, the bond, but they'll put an escalation clause so that if your assets go over that, the amount, that amount, then it'll, it'll, increase the bond. If you don't have that escalation clause, you wanna make sure when you renew that you renew it for the proper amount.
Kim Moore: Yeah. And, and the reason we bring this up at your end is, is of course looking forward to next year. Cause that measurement period's gonna start again beginning of 2023. Unfortunately the markets tended to be heading down. But what can happen is maybe you're not, your company isn't growing that fast.
Maybe the participants aren't growing that fast in your plan, so you think, Oh, there's no need for me really to look at the bond. But you gotta remember, it's based on asset value.
Karen Hill: Mm-hmm.
Kim Moore: So if the market were to fluctuate highly right at that time where you're, you're gonna be measuring that for, for bond purposes, that could affect it as well.
So we always, I think having that kind of escalation provision in the bond is a good thing. Costs a little bit more, but these bonds are not all that expensive.
Karen Hill: No.
Kim Moore: It, it always, it kind of is upsetting to me when a client says, Well, maybe a provider's told me I don't need to have that bond. I don't wanna spend the money.
Well, it's not that much money. It's good protection because one of the reasons you have that bond is if something happens to the funds as they're being transferred around, that bond is providing that, that backup coverage. It's to protect the assets of. Employees basically. So, so they're, they're a good idea.
They are required. I mean, it's a federal requirement that you have them, but I think having that escalation option there, like I said, doesn't add that much cost to the bond, but it gives you a lot of extra coverage, and could protect you. I mean, we've seen places too where, they're a type of employer that they go by contracts.
So their business is all based around contracts that they have with other entities. Maybe they get a very large contract and that happens very quickly. So all of a sudden they need a, a lot more employees to cover that contract that's gonna make the assets jump.
Karen Hill: Mm-hmm.
Kim Moore: You may have money coming into the plan, you know, rollovers into the plan because of that.
So very quickly, the assets can, can grow and, and now your old bond isn't sufficient. So now's a good time. Look at that. Just double check it. It only takes you a minute. It is an area, the Department of Labor has said that they're looking at. It is put on the form 5,500. When you file the 5500, regardless of whether you need an audit or not, you will still have to indicate that you have a bond in the amount of the bond. So it is an easily searchable item for the Department of Labor. So it's, it's an area. Don't, don't get caught up. It's, like I said, they're inexpensive, they're easy to get. There's hundreds of providers out there that provide them. If you are hearing this and you're thinking, I don't have a bond uh-oh, how do I get.
Talk to whatever insurance provider that you deal with, if they more than likely have access to an entity that provides these types of policies. If they don't, they can help you find one. So it's, it's e- This is easy, this is an easy area. Don't, don't have a compliance issue over this cuz this is an easy thing.
Karen Hill: Mm-hmm.
Kim Moore: so. Next thing I had on my list was planning for year end reporting. This, this part's not so easy. This is an area a lot of people get, get tripped up. Couple of things here. I and one of them I kind of already mentioned you. A good thing to to always maintain is a copy of a year end payroll report.
And I would keep that for several years because you might need it for a 401K plan audit. You might need it for an insurance audit. You might need it for an IRS audit. I mean, there's a lot of different types of investigations, audits, et cetera, which will rely on a year end payroll report. And that year end report should cover the whole year, not just the final payroll.
So it should cover all the payrolls for the year. Should cover all the employees, should show you their compensation and the different components of compensation, the deductions and the different types of deductions. And then of course, it's gonna come to a net pay, for that employee. And then it, we like it when it totals it at the end for the- all of the company as well.
That just makes it a lot easier to work with. If, if you have a payroll service and you can get in and you can pull reports easily, you may not need to to pull an actual report and save it. I still think it's a good idea to pull one and keep it. What if beginning of next year, whoever in your company is the decision maker says, Hey, we wanna switch payroll companies from A to B.
You're not gonna have access like you would've had if you were staying with that same payroll company. So I always think it's a good idea. to pull down one of those, payroll reports, and keep it, but there, there's a lot of different kinds of activity, in reporting that your auditor may need.
So if you have been through audits before, you're gonna know what your auditor's gonna ask for. So as you're running that final payroll, I'd go ahead, run those reports, get 'em ready. That way when the auditor for them, you can just say, Here you go, and you don't have to spend time. You're already in there anyway.
It's usually running those, the final payrolls and, and getting everything ready for the year end process. The other area that we ask people to, you know, to take a look at and to think about is your, what's going to be a part of your year end reporting, which is gonna come up in the beginning of, usually the beginning of the following year.
So usually January of, in this case, 2023. If you have a TPA, sometimes they start early, but you'll usually get a questionnaire of some sort and it's gonna ask you things like, did you have a fidelity dollar bond in place during the year? If so, what was the dollar amount? Because that needs reported on the 5500.
It's gonna ask you, did you have any late contributions during the year? Cause that's gonna have to be reported on the 5500. Those questionnaires, you've never done them before, they can be a little daunting. So, you know. Look and see. Did, do you have last year's questionnaire? Can you get the questionnaire as early as possible?
Make sure you got plenty of time to fill it out. Getting that questionnaire turned around quickly is really important as well as if the provider's asking you for some type of year end payroll report, a census, those are terms we see a lot. That is gonna get folded into the discrimination testing that your service provider's going to do, and that's very important that that gets done, that it's accurate and that it's timely.
It's, if it's not accurate, you can cause folks to have to have corrective distributions, which will become taxable to them that they weren't planning on. So talk a little bit more about that here in a second, but very important that it's accurate. You don't wanna be making mistakes cuz you're affecting people's incomes once you start getting into the tax situation.
It's also important, it's very, it's timely because if it's not done timely, you can actually have to pay, additional excise tax because it's late. There are rules around that. So, I don't know, Karen, any, any thoughts around on those topic.
Karen Hill: Um, no, I think you covered, you covered it, but the, the census is the one thing that it seems, trips up a lot of people what actually is needed and your TPA should let you know what information they need if it's not something that you can just pull from the payroll report.
Kim Moore: Right? Yeah. And if you have questions, I would strongly encourage you. Don't make assumptions around. Particular activity. Don't assume, well they're saying this, but I bet they mean this, so I'm gonna give them this information cuz that can end up causing the test to either pass when it shouldn't or fail when it shouldn't.
That can cause you to be outta compliance. Maybe it, it, you just start down a path you don't wanna go down.
Karen Hill: Mm-hmm.
Kim Moore: So if you're not sure exactly what they're asking for, or it's a little bit confusing. Did you mean this or, you know, did you mean net pay? Did you mean, you know, full gross compensation, including everything, you know, what exactly did you mean by whatever a term that they might be using?
Get with your rep, or call your service provider if you don't have a signed rep and make sure that you get clarification. They should have some like booklet. Handout or could point you to a website page that can help give you very specific answers to questions. Cause the questions you have are questions everybody's gonna ask.
So they should have some kind of FAQ or something to that. They can either, you know, give you access to or give you a copy of or can go over verbally with you. But make sure you, you ask those questions. Don't, don't assume, because we've seen a lot of. Really bad things happen in the space. We've seen situations where the, the compliance testing is done.
They feel like, I, you know, I completed that. I'm, I'm done over with that. The auditor comes in, you get looking at it and half the company isn't on there. So now you've gotta come back. You've gotta do it. Now, obviously it's late, so you're gonna have a fine. Now it fails when it passed before because you didn't include everyone.
So now people are gonna get distributions. They've already filed their tax returns. So now, I mean, it just turns into a mess. And the people, we've talked about this before on podcasts, the people that usually are failing those tests are your higher-level individuals. So the owner of the company, your senior management, you know, people on your board, and, and those are not the people that you wanna tick off.
So not an area that, that you wanna make a mistake in. And it's easy to make a mistake. It's, it's, it's a very kind of complicated area. So, pay a little bit of attention here. Spend some time, get ready. Another thing I like to always mention as we get to the end of the year, and you're gonna be flipping over into a new year.
If your plan typically fails discrimination testing, reach out to your service provider. Cuz there are things you can do. You can either modify the plan, so that it will automatically pass some of these tests, if, if that's something that you're interested in. Or you can have them take a look and run some earlier tests a little late now for, for next year.
But you could start doing it into next year for the following year. That way they can start gauging and there's different ways that individuals, those ones that are those highly compensated folks that are the ones that are probably more likely gonna fail cause the test to fail, and they're the ones that are gonna get those corrective distributions.
There's things that they can do timing-wise, potentially that can help the plan not to fail. So that's another area we see some people want to explore. Again, talk to your service provider. It gets very complicated. Not anything we can do on a podcast. Something that certainly, you can talk to your service provider about.
Karen. Open enrollment.
Karen Hill: Yes.
Kim Moore: It's kind of that time.
Karen Hill: Yes. We actually going through open enrollment here, just started this last week. Anyway, when you have your open enrollment, that usually includes all of your benefits. So you wanna make sure- I'm gonna put my glasses back on- to include the 401K plan in your, in the discussions.
And it might be helpful to, if you can get somebody from, your provider to come in and talk to. To any of your employees or participants, if they have any questions that might be helpful, you wanna make sure that you, you have all the materials that you need for the employees that they might need to use.
I mean, we, like I said, we just had open enrollment. Everything was done online. So if that's the case, make sure that everything is running well. That way that everything's set up and that the employees can get in there. If you're using paper forms, make sure that you have an adequate number of paper forms, and just, you know, be.
Be prepared to answer any questions that the employees might have. And you know, we just finished talking about the compliance testing and one of the things that helps pass, helps you pass the compliance testing is if you have a higher participation rate. Generally what we see is that no matter what the highly compensated people are putting in, if there is a high rate of participation in the plan, generally those plans have a lower tendency to fail. That they just, they usually pass the compliance testing and you don't have those things.
So, you know, really you try to encourage and, that's why maybe bringing in the, an investment advisor or somebody from the provider could help because they could really answer those questions that they might have. But why is this a good thing for me to do? Because I have seen in the past I act,
I had a client where, they had a whole bunch of union employees and, and the union was telling them to not participate in their 401(k) plan because it would reduce their income for their social security.
Which is true, but with the, you know, with the social security being up in the air, like it is, is that really the way want to, the, the path you wanna go down? It's like, okay, I'm not gonna
save anything.
Kim Moore: Yeah. It's ignoring the whole, the whole retirement. Saving for retirement, which is the whole purpose of a 401(k).
Karen Hill: But that's what their union heads were telling them.
Kim Moore: Yeah. Yeah. And that, which is who they would, would definitely be listening to.
Karen Hill: And this was, this was prior to Roth, so you know, that might be an, an answer, you know. So, okay, well you, you, you don't want to reduce your income then maybe you should do a Roth contribution instead. And, you know, the investment advisors and the, the service providers would be able to help answers any of the questions that they might have about those types of things.
Kim Moore: Yeah, yeah, definitely. And I, I, you know, I think one of the biggest things is that open enrollment, they tend to focus on your medical, dental, those kind of benefits, that it kind of, Oh, that's what open enrollment is. But really open enrollment is another opportunity for you to stress with your employees that.
It's a total compensation package. So it's your salary, it's all these different benefits. It's your PTO. I mean, it's the whole gamut. We don't want you as an employee to only focus on, we provide you health insurance or, or whatever element you're, you're stressing. So I think it's a good time to put all of those things in, in the bucket and say, Look, we offer you this total comprehensive, benefit package, including course 401(k) is, is one component of it.
I think, it serves a lot of different purposes. But definitely something, something to, to keep in mind, I think as, and especially timely as open enrollment is, is upon us in a lot of cases. You mentioned the investment advisor, another area that, I think is a good thing to look at. Certainly more often probably than just your end, but year end's a good time to do it is to, work with your investment professional if you have one or, or multiples of those, maybe a company.
And talk about the investments that you have in the plan, the lineup. Is it a good lineup? Do you have a variety of options? Now this can go too far. We're not suggesting you have a hundred different investment options, which we have seen. Yes. And we've had a few examples of that this year where people, I think they go overboard and that just gets confusing to everyone when you have that many, but you definitely want to have a good variety, that you're offering, not all just equity based mutual funds as an example, that that would not be a good, fund lineup that's not diversified.
So you wanna have, a lot of different options. You wanna cover the different types of investments. You wanna consider some short term, long term, higher risk, low risk, you know, all that kind of stuff, which definitely your investment advisor could help you with. But you also wanna look at the lineup that you have.
How are they performing compared to a benchmark? You don't wanna compare a bond fund to an equity fund and say, Oh, one's doing better than the other. Cuz obviously that's driven by the economy. But you wanna compare a bond fund to bond fund benchmarks. Equities to equity benchmarks of that type, you know, is it a value?
Is it a growth? What, you know, whatever it is. So again, that's, that's for your investment advisor. They should not only, they have the background experience to help you with that, but they have tools that they can run your funds through, compare it to benchmarks. They'll give you nice, nifty little graphs and show you, you know, all these look good, but this one is kind of an outlier.
We ought to take a look at this one, and we recommend that you do. Not just annually, but maybe twice a year, maybe quarterly. It kind of depends partly on how big your company is and also what the market's doing. So if the market's fluctuating a lot, you might wanna look at it a little bit more often. If you're thinking of changing funds, you might wanna look at a little bit more often, or if you're thinking of changing providers, which will cause the lineup to change.
Karen Hill: Mm-hmm.
Kim Moore: That's another good consideration. We also recommend you document these discussions, even if it's just handwritten notes. There have been lawsuits that have come up recently about companies not reviewing this fund lineup, it is part of your fiduciary duty. So, like I said, even if you got hand notes and you could say, we looked at it and we considered it, but we felt it was okay, and here's the reason why.
That's gonna go a long way in protecting you, if a complaint is raised or if there ever were to be a lawsuit. So again, Something to consider. If nothing else, if you maybe just had one of these meetings, we're gonna talk about this here in a minute, but schedule out those meetings for next year.
Make sure that you know your advisors in good shape, you're happy with them. They're gonna still be available next year. Schedule out those meetings so that they don't, you know, everybody has good intentions, but a lot of times things fall through the cracks. So make sure that you're, you're, you're planning that out for next year.
Karen, you talked about participation in the plan.
Karen Hill: Yes.
Kim Moore: You kinda already hit on this, this was our, our next level on here. But you wanna talk about auto enroll?
Karen Hill: Yeah, that's, auto enroll is a good way to increase participation in the plan because generally what happens it for a lot of the time is you say, Oh, I have a 401(k) plan, and it it, unless you have, where the eligibility is immediately upon higher or within a couple of months where you can do all of this during onboarding. Generally what happens a lot of the time is they just don't do anything about it. So with auto enroll, when they are eligible, you give them a a time period usually where they can opt out of if they want to.
And if they don't opt out, then they're automatically enrolled at a certain percentage and usually it's 3%. Although I've seen, I've seen 1% up to 4%. I don't, I don't think I've seen anything higher than 4%, although I'm sure you could. You could do that if you wanted to. And you also, you could add an auto escalation clause in there, which means that at a, either on their higher date or maybe the first of the year, or maybe July 1st, or a certain, you know, some certain date, they will automatically go up 1% or 2% usually.
Unless again, that they opt out and generally this will increase the participation in your plan because just like people are inclined to not go online and enroll, they also are inclined to not go online and opt out.
Kim Moore: Opt out. Or unenroll.
Karen Hill: Yeah.
Kim Moore: Yeah. And I mean, we have real, real life experience seeing this.
Karen Hill: Yeah.
Kim Moore: I mean the plans that we audit that are auto enroll have extremely high
Karen Hill: Extremely high, yeah.
Kim Moore: Participation levels.
Karen Hill: Yes.
Kim Moore: I mean, almost a hundred percent. They're very, very high.
Karen Hill: And that seems to be the case, whether, even if there's not a match.
Kim Moore: Right. Yeah. And I, and it's, it really is just a human behavior thing that people, just, they won't take the time to to go in and say, I don't wanna do this anymore.
It's good on the participation side, it can be a negative on the administration side. If you have, folks that you have a, a high turnover, a lot of people that come and go as employees. You know, you can end up with a lot of people that have $25 accounts and they've left and you can't find them, and now you've gotta disperse the funds.
And so it can, it can be, a negative on the administration side if, if you are in that situation. But if you have a more stable workforce, I think certainly if you have a more salaried workforce,
Karen Hill: Mm-hmm.
Kim Moore: Definitely auto enroll is, is something to consider. And the other thing we always mention to people, if you wanna increase the participation, communication is key.
We kinda talked about that already, but also adding a match or some other type of company, profit sharing component, an end of year discretionary contribution. There's whole variety of things. Again, talk to your service provider. We, we don't have time on this podcast to cover all the options, but definitely, talk to your service provider if you'd like to increase participation. We talk to people that are frustrated. You know, "I go to all this effort to set up this 401(k) plan and, and then nobody's wants to take advantage of it." Talk to your service provider. Cause there are ways that you can work with that and, and bump up that, service, uh, participation in the plan.
We are, we are just running about outta time here. So I'm just gonna run through a couple of real, real quick, uh, hit things to do at year end that I think are, are good ideas. Good idea to just take in a quick review of your plan.
So, am I okay with my plan document? Do I need to make any changes? Again, talk to your service provider. There are some new options out there and we've talked about some of those options in previous podcasts. So if you're interested in that, go, go take a look at some of our previous podcasts. Um, you'll get some ideas, but double check that.
Look at your service provider. So that would be your payroll provider that you're using, your 401K administrator, whoever's holding the assets for your plan, your investment advisor. All of those, if you have a third party administrator, all of those groups are service providers that touch components of the plan.
So take a look at all of those folks. Are they all still, you know, relevant? Do they give you the service that you need? What's the pricing on those? Is it a good time to maybe, do a, do a bid on some of those services? So maybe you're fine, Everything's good, Take the box, move on. But it's a good time just to, to think about that at your end.
If you're thinking about changing, that'll give you plenty of time over the next year, you know, to be, to be looking at other options. Look at your procedures. Where did you have problems last? Probably needs a procedure update. Maybe there's a control missing. Maybe there's training needed, good time of the year to, you know, to take a look at that.
Same thing on the retention side. Did you have problems with your auditor asking for things and that you couldn't find them or you'd thrown them away or, um, someone else had them and you couldn't get ahold of them? So look at those document retention guidelines. Year end is a good time to do that cuz that's usually when you get past year end and people start filing away things. So good time to take a look at their retention um, guidelines.
The last thing that I'm gonna bring up, and I think this is absolutely critical to running a good plan, is a compliance calendar. Um, and, and it's now is the perfect time to sit down and say, What are all the activities that need to happen for my 401(k) run smoothly?
When do I need to give them that questionnaire for my discrimination testing? When do I need to give them a year end payroll file? When do I need to disseminate my fee disclosure? When do I need to send out the sub annual? When do I need to start asking about my form 5500 if I need to get an auditor?
Let me plan that out. So there's a whole series of activities that you need to do. Even things like my payroll. Sit down and say, "What's my payroll schedule gonna be for the upcoming year?" And then talked to your payroll folks about, you know, is such and such a date we need to have the 401K contributions submitted to the provider?
Same day, next day, whatever is your company requirement, but make sure that they have a clear understanding of what that is to avoid late contributions. So I'm only bringing up a few things. That compliance calendar would actually be a pretty busy calendar, but if you set that up ahead of time, you've got everything mapped out, you've assigned each task to an individual, then things aren't gonna fall through the cracks. Where somebody, "well, I thought Susie was doing it." Oh no, Susie thought Dave was doing it, and, and it doesn't get done.
That can get you a long way down the road to making sure that your compliance is in good shape for your plan and you're not gonna, you're not gonna have problems with your auditor. You're not gonna hear from the DOL or the irs, and things are all gonna, it's gonna run smoothly. It'll go a long way to helping. With that, Karen, any, any last thoughts you got on wrapping up your year end?
Karen Hill: Um, that also just would be a good time to look at who has access to your different systems.
Kim Moore: Yes.
Karen Hill: And make sure that those are updated.
Kim Moore: Yeah, very good point. We see this a lot where people change roles and they forget to remove their access. It's, it's kind of, once you have the access, you keep it forever. And that's not a good thing. And especially in today's world with all of the security issues that we've all seen and we've done podcasts around cyber security.
So if that's an area that interests you, go search out that podcast. But yeah, year end's a good time to, to map that out as.
With that, we're, we're gonna wrap up this month's podcast and we're going to let you go away and, and work on all those tasks. I'm gonna throw out my email address one last time in case any of this that we talked about sparked your interest or you'd like, some additional clarification on some points.
My email address is a letter k m o o r e, so again, k m o o r e at Anders CPA dot. That's A N D E R S cpa.com. Feel free to drop me a note, be happy to chat with you or answer questions, get you material or if you have a suggestion for a future podcast. We're always looking for guest participants and additional topics that might be of interest to our viewers.
Otherwise, with that, we are gonna wrap it up and thank everyone. For their, their listening today and enjoy the rest of your day.
Narrator: Enjoy this podcast? Visit our website@anderscpa.com slash 401k to get more tips and strategies for achieving 401k audit success. We're here to be a resource with ever-changing rules and regulations.