Planning Ahead for 2016
With the end of the calendar year drawing near, this is a good time for employers to conduct a year-end review to make sure their benefit plans are up-to-date and operating in compliance with the law. In addition, the end of the year brings a number of important deadlines. To assist you with your year-end projects, this newsletter provides a summary of some important dates and new developments.
Important Reminders for 2015
- For 2016, limits applicable to qualified plans generally remain unchanged. A table setting forth the IRS limits appears at the end of this newsletter.
- If you have participant-directed investments and utilize a “Qualified Default Investment Alternative” (“QDIA”) for “default” investments, you should provide your default investment informational notice by December 1, 2015 if you have a calendar year plan year. Your plan recordkeeper generally will assist you in preparing the notice and coordinating its distribution.
- Participant-directed defined contribution plans must provide annual notices regarding plan expenses and investments. Plans should be sure they have met that obligation; the deadline will vary depending on the timing the plan has established.
- The Department of Labor amended the final regulations in 2015 to allow plans to issue updated fee disclosures no more than 14 months after the previous year’s fee disclosure, rather than requiring the next year’s disclosure to be issued within 12 months of the previous year’s disclosure.
- If you have a “safe harbor” 401(k) or 403(b) plan or want to adopt a safe harbor structure for 2016, you must provide your annual notice by December 1, 2015 if you have a calendar year plan year. This applies regardless of whether you are using a traditional safe harbor or an automatic enrollment safe harbor. Remember that under IRS regulations that first took effect for 2014 safe harbor notices, the safe harbor notice should include a warning that the employer retains the right to reduce or eliminate safe harbor contributions, in order to preserve this ability for the employer.
- If you have an automatic enrollment 401(k) or 403(b) plan, regardless of whether it is a “safe harbor” plan, you must provide your automatic enrollment annual notice by December 1, 2015 if you have a calendar year plan year.
- “Hybrid” defined benefit plans (such as “cash balance” and “pension equity” plans) must adopt amendments reflecting the IRS’ final regulations for these plans by the end of the 2015 plan year. The regulations take effect for the first plan year beginning on or after January 1, 2016.
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