Compliance December 29, 2020

2021 ERISA Plan Compliance Calendar

A schedule to help plan sponsors track important due dates for their plan

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Art by Jonathan Muroya

Being a retirement plan sponsor involves juggling many tasks, one of the more important being to make sure your plan complies with all pertinent federal and local regulations. A compliance calendar keeps track of your company’s required filings, their due dates and related details so you can avoid incurring any fines or other penalties for late filings or missing information.

What follows is intended to alert PLANSPONSOR readers to some of the significant regulatory dates for 2021—it does not identify all compliance obligations or due dates. Additionally, the calendar assumes that a plan is being administered on a calendar year basis by an employer using a calendar fiscal year.

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For the most part, the information for pension plans applies to single employer plans.

A downloadable PDF is available here.


January

4 // Deadline for contributions to a single-employer defined benefit (DB) plan that has an extended due date pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act.

15 // Deadline for DB plans that have a funding shortfall for the preceding plan year to make their last required quarterly contribution for 2020 to the plan trust—i.e., due 15 days after the last plan year quarter-end.

30 // Deadline to provide participants and beneficiaries with the DB notice of benefit restrictions if the plan is less than 60% funded. Note: Due January 30, or 30 days after the valuation date at which the restriction is determined.

February

1 // Many recordkeepers require participant data for average deferral percentage (ADP)/average contribution percentage (ACP), top-heavy and 402(g) compliance testing to be returned by this date. Note: Usually requested by January 31, which falls on a weekend in 2021.

1 // Deadline for sending Form 1099-R to participants who received distributions during the previous year. Note: Usually due by January 31, which falls on a weekend in 2021.

14 // Deadline for participant-directed defined contribution (DC) plans to provide participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses actually charged to individual plan accounts during last quarter of 2020. Note: Due 45 days after the end of the quarter. February 14 falls on a weekend in 2021. No guidance clearly allows extending the deadline to the next business day.

March

1 // The Pension Benefit Guaranty Corporation (PBGC) Form 1-ES estimated premium payment—i.e., the flat-rate premium for plans with more than 500 participants—is due to PBGC. Note: Due by the last day of the second month in the premium payment year. The last day of February falls on a weekend in 2021. PBGC Form 1-ES Instructions permit the filing on the next business day.

 1 // Deadline for filing Form 1099-R with the IRS if not filed electronically, to report distributions made in the previous year. Note: Usually due by February 28, which falls on a weekend in 2021.

15 // Employer contributions due to the retirement plan’s trust for S-corporations and partnerships with December 31 fiscal year-ends, in order to take deductions with no corporate tax extension.

15 // Forms 1042 and 1042-S due to the IRS to report, respectively, income tax withheld from distributions made to nonresident aliens and retirement plan distributions made to nonresident aliens.

15 // Deadline for distributing ADP/ACP refunds without incurring a 10% excise tax on the employer—i.e., due 2 1/2 months following the plan year-end. Note: A special deadline applies to plans satisfying the requirements of an eligible automatic contribution arrangement (EACA). (See July.)

 15 // Deadline to apply to the IRS for a waiver of the minimum funding standard for DB and money purchase pension plans—i.e., no later than the 15th day of the third month after the close of the plan year for which the waiver is requested.

31 // Electronic filings of Form 1099-R for 2020 distributions are due to the IRS.

April

1 // Initial required minimum distribution (RMD) is due to participants who turned 72 in 2020. Note: For DC plans, a participant could elect to waive their 2020 RMD pursuant to the CARES Act if permitted by the plan.
15 // Deadline for DB plans that have a funding shortfall for the preceding plan year to make the first required quarterly contribution for the 2021 plan year to their plan trust.

15 // 402(g) distributions of excess deferral amounts is due to participants.

15 // Employer contributions due to the plan’s trust for C-corporations with December 31 fiscal year-ends in order to take deductions with no corporate tax extension.

30 // Deadline for sponsors of single and multiemployer DB pension plans to send their annual funding notice to participants, beneficiaries and labor organizations representing participants. Small plans—i.e., those covering fewer than 100 participants—must provide the notice by the IRS filing due date of the plan’s Form 5500; the notice takes the place of the summary annual report for a DB plan.

 30 // Final 2020 comprehensive PBGC premium due to PBGC for plans that filed an earlier estimated variable rate premium in the October 15, 2020, comprehensive filing.

May

15 // Deadline for participant-directed DC plans to supply participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses actually charged to individual plan accounts during first quarter of this year. Note: Due 45 days after the end of the quarter. May 15 falls on a weekend in 2021. No guidance clearly allows extending the deadline to the next business day.

June

29 // Deadline for retirement plans with publicly traded employer securities to file their Form 11-K annual report—i.e., by 180 days after the end of the retirement plan year.
30 // ADP/ACP refunds for EACA plans are due to highly compensated employees (HCEs), to avoid a 10% excise tax on the employer.

July

15 // Deadline for DB plans that have a funding shortfall for the preceding plan year to make the second-quarter contribution for the 2021 plan year to their plan trust.
29 // Summary of material modifications is due to participants—i.e., 210 days after the end of the plan year in which the change was adopted—unless it was included in a timely updated summary plan description (SPD).


August

2 // Form 5330, which reports excise taxes related to employee benefit plans, is due to the IRS. Note: Usually due by July 31, which falls on a weekend in 2021.

2 // Form 5500 is due to the IRS—i.e., due seven months after the plan year-end. Note: Usually due by July 31 for a calendar year plan, which falls on a weekend in 2021.

2 // Form 5558 is due to the IRS; also called the Application for Extension of Time to File Certain Employee Plan Returns, it is used to apply for an extension to file Forms 5500 and/or 5330. Note: Usually due by July 31, which falls on a weekend in 2021.

2 // Deadline for annual benefit statements for plans not offering participant-directed investments Note: Due by Form 5500 filing deadline—usually July 31, which falls on a weekend in 2021.

14 // Deadline for participant-directed DC plans to provide participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses that were charged to individual plan accounts during second quarter of 2021. Note: Due 45 days after the end of the quarter. August 14 falls on a weekend in 2021. No guidance clearly allows extending the deadline to the next business day.

September

15 // Deadline for money purchase pension, target benefit and DB plans to make required contributions to their plan trust—i.e., by 8 1/2 months after the plan year-end—and for sponsors that filed a corporate tax extension to make 2020 employer profit-sharing and matching contributions. 
15 // Minimum funding deadline for the 2020 plan year for pension plans that do not have a funding shortfall for the preceding plan year.

15 // Form 5500 due to the Employee Benefits Security Administration (EBSA) from plans eligible for an automatic extension linked to a corporate tax extension.

18 // Requirement to include lifetime income disclosures in benefit statements furnished to participants of DC plans. Note: Effective for statements provided after this date.

30 // Summary annual reports are due to participants from plans with a December 31 year-end—i.e., due nine months after the plan year-end or two months after filing Form 5500.

October

1 // Start of the period to disseminate annual notices to participants, including the 401(k) safe harbor, automatic contribution arrangement (ACA), qualified automatic contribution arrangement (QACA) safe harbor and qualified default investment alternative (QDIA)—i.e., from 90 to 30 days prior to the end of the current plan year.*
15 // PBGC flat rate and variable rate annual premium filing and payment is due to the PBGC—i.e., by the 15th day of the 10th full month that begins on or after the first day of the premium payment year.

15 // IRS deadline for filing Form 5500 after a plan files Form 5558 to request an extension.

15 // Deadline for DB plans with a funding shortfall in 2020 to make the third-quarter contribution for the 2021 plan year to their plan trust.

15 // IRS deadline for filing the retroactive amendment to correct an Internal Revenue Code (IRC) Section 410(b) coverage or Section 401(a)(4) nondiscrimination failure.

15 // Form 5310-A due to the IRS to give notice of the establishment of qualified separate lines of business.

November

14 // Deadline for participant-directed DC plans to provide participants with quarterly benefit/disclosure statement and statement of plan fees and expenses actually charged to individual plan accounts during third quarter of 2021. Note: Due 45 days after the end of the quarter.
15 // Summary annual reports due to participants if the Form 5500 deadline was extended because of a corporate tax filing extension.

December

1 // Final deadline to disseminate the 401(k) safe harbor annual notice to plan participants.
1 // Final deadline for supplying the QDIA annual required notice to all participants who were defaulted into a QDIA no more than 30 days prior to the beginning of the plan year.

 1 // Final deadline to provide participants with the annual automatic enrollment and default investment notices; these may be combined with the QDIA notice.

1 // Deadline to elect safe harbor status for the current plan year with nonelective contributions, if the nonelective contribution is less than 4% of compensation.

15 // Extended deadline for providing summary annual reports to participants if the Form 5500 deadline was extended because of filing Form 5558.

31 // 2021 RMDs are due.

31 // Deadline for correcting a failed ADP/ACP test.

31 // Deadline to adopt discretionary amendments to the plan, subject to certain exceptions—e.g., anti-cutbacks.

31 // Deadline for a safe harbor plan to remove its safe harbor status for the following year or for an existing DC plan to convert to a safe harbor plan.

31 // Deadline to elect safe harbor status for the prior plan year with a nonelective contribution of 4% or more of compensation.

 

*If a traditional safe harbor 401(k) plan provides a nonelective contribution but also provides non-safe harbor matching contributions that are structured so the plan is not required to satisfy the actual contribution percentage (ACP) test, then the plan still must satisfy the safe harbor notice requirements. If a traditional safe harbor 401(k) plan that satisfies the safe harbor nonelective contribution requirements also provides non-safe harbor matching contributions and is required to satisfy the ACP test, then the plan need not satisfy the safe harbor notice requirements.

Participant Fee Disclosure Requirements

  • Plan sponsors must furnish fee disclosures to participants on or before the date on which they or their beneficiary can first direct their investments in the plan and at least annually thereafter.
  • Plan sponsors must, at least quarterly, furnish participants with a statement of account expenses and the services for which they apply.
  • If any changes are made to fee information, plan sponsors must communicate the change to participants at least 30 days, but not more than 90 days, in advance of it.

Miscellaneous Requirements

  • Defined contribution (DC) plan statements must be provided at least annually for participants who do not have the right to direct their investments, and at least quarterly for those who do have the right.
  • A QDIA [qualified default investment alternative] notice for plans that choose to use a QDIA must be provided to participants 30 days prior to their first investment. Note: If the plan has immediate eligibility, participants must be given the notice as soon as administratively feasible.
  • Notice to participants of a qualified automatic contribution arrangement (QACA) or an eligible automatic contribution arrangement (EACA), and of a participant’s ability to opt out, must be provided 30 days prior to eligibility and then annually. For plans with immediate eligibility, notice may be given on or as soon as feasible after eligibility.
  • Defined benefit (DB) or money purchase pension (MPP) plans must provide the Pension Benefit Guaranty Corporation (PBGC) with a notice of failure to meet minimum funding standards within 60 days of a missed payment or denial of payment waiver.
  • An explanation of a plan’s pre-retirement survivor annuity must be provided to a participant between the first day of the plan year in which he reaches age 32 and the last day of plan year in which he reaches 35. If a participant is over 35 when hired, he should be given the explanation within one year of hire.
  • An explanation of a joint and survivor annuity must be made to affected plan participants between 90 and 30 days before the annuity’s starting date. 

A downloadable PDF is available here.

—Rebecca Moore, with reviewing and editing by Summer Conley and Elise Norcini at Faegre Drinker Biddle & Reath LLP in Chicago.
Benefits December 29, 2020

Financial Wellness Programs Need to Include a Way to Measure Success

There are specific metrics that can be measured via data and employee and employer surveys.

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It is important for employers offering a financial wellness program to measure the success of their programs. This will help determine whether employers are getting a good return on their investment, as well as whether there is a need for change to financial wellness program components.

In a Viewpoint article, “A Return on Wellness—Measuring Financial Wellness Programs,” the Retirement Advisor Council notes that employee surveys and internal information gathered prior to the launch of a financial wellness program establish a baseline from which to measure the program’s success.

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Some goals such as improving retirement readiness are relatively easy to measure, Cerulli Associates says in a 2019 report. However, others, such as improving financial literacy, increasing workplace productivity and decreasing employee stress (14%) can be more nebulous.

While improvement in employee situations and actions is one part of measuring the success of financial wellness programs, employers can also measure how the financial wellness program improves the cost employee financial stress imposes on them. The sixth annual edition of John Hancock Retirement’s Financial Stress Survey shows more than half of employees worry at least once a week about personal finances while on the job, causing workplace distraction and a loss of productivity. This loss of productivity, combined with absenteeism from financial stress, has a major impact on organizations, John Hancock says.

In dollar terms, absenteeism and lower productivity tied to financial stress is costing more than an estimated $1,900 per year, per employee, and totaling an estimated annual loss of $1 million for midsized employers and $19 million for large employers, according to John Hancock’s findings.

Issues Financial Wellness Programs Should Address

The Retirement Advisor Council’s Viewpoint article suggests root causes of employee financial stress that wellness programs should address.

These include, but are not limited to:

  • Increased housing prices and extreme housing shocks;
  • Increased student loan and consumer debt that employees are carrying throughout their working lives and into retirement;
  • Market volatility and its relation to retirement savings;
  • Rising health care spending, which has outpaced any increase in employee wages over the last decade;
  • Periods of high and prolonged unemployment;
  • Increased longevity of loved ones and escalating caregiving needs;
  • The changing nature of work and increasing integration of technology, requiring new skill sets to advance in current jobs and be marketable for other jobs; and
  • Increased lifespan in retirement that needs to be funded, as well as a greater possibility of needing long-term care.

“An objective financial wellness assessment can play a pivotal role in providing actionable feedback to employers regarding the appropriate intervention and [financial wellness program] design,” the article says. “The financial wellness program can then be tailored to address the specific goals and needs of the particular workforce.”

No Success Without Employee Engagement

In a previous Viewpoint, “What Do You Mean When You Say Financial Wellness?”, the Retirement Advisor Council points out that financial wellness programs must be engaging to be successful.

It says the program should be accessible and usable to anyone regardless of literacy, wealth or earnings; delivered to employees as early as possible and using a combination of media (online, print, in-person, video conferencing, podcasts, audio content and toll-free contact centers); supported live at least 12 hours a day and six days a week; available from a trusted source; and mindful of privacy requirements, cybersecurity and data protection needs.

One strategy to drive engagement from participants is to design these programs to be entertaining, the paper suggests.

Eric Henon, executive director of the Retirement Advisor Council, says that a survey of advisers found that on average, 19% of clients use a rewards program to encourage financial wellness program engagement. Most advisers are in the 1%-to-25%-of-clients range. “On the high end, 3% of advisers say all their clients have a rewards program for financial wellness; 8% say 75% of their clients or more have a rewards program in place; and 14% say 50% or more of their clients have a rewards program for financial wellness,” he says.

Measuring engagement of employees is one way to measure the success of financial wellness programs.

Henon says the financial wellness service provider itself will monitor the use of services. Levels of engagement are measured by the number of employees who access the program, the number who attend education sessions and the number who meet with advisers/coaches. “The responsibility for measuring engagement depends on the model used for the program and whether it is recordkeeper provided, adviser provided or provided by another third-party firm,” he says.

Henon adds that the champion for financial wellness within the employer’s organization should also track other information, such as the number of employees who provided information for the baseline and the number of employees that have created a step-by-step plan of action. “There needs to be someone accountable for measuring various engagement metrics,” he says. “Whether a person gathers the information or it is provided through automation, the person accountable should be identified before the program is rolled out.”

Measuring Program Success

The Viewpoint report suggests qualitative and quantitative metrics to measure the return on investment of financial wellness programs. It says employee and manager surveys can be used to measure changes in employee morale and job satisfaction, absenteeism, satisfaction with the financial wellness program, financial stress, debt level and confidence in retirement readiness.

Henon notes that a hypothetical calculation of employer costs due to financial stress doesn’t include the cost of employee turnover or increased use of health care because of the stress. He says the best way to identify turnover costs is through manager surveys.

The report also identifies data points that can be used in measuring the success of financial wellness programs. Data can show changes in health insurance claims and costs, in addition to the number of employee absences and tardiness, the level of employee participation in the employer’s retirement plan, the use of retirement plan loans and in-service distributions and the participation in and use of other employee benefits.

Henon says the measurement of the return on financial wellness should be done at least annually, but he thinks every six months is even better. “If you look at the progress Prudential made in the case study in our Viewpoint, there was a fair amount of progress from year to year, and decisions to modify the program can be made annually,” he says. “But, a mid-year measure will help to discern changes needed for the following year.”

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