Given that a variety of qualified retirement deadlines are approaching, we thought a refresher on the subject would be helpful, especially for plans that utilize a calendar plan year. This article is intended to alert plan sponsors about applicable major qualified retirement plan deadlines that fall in the first half of 2019. (Note that we have not included a complete list of all deadlines applicable to qualified plans, but instead focused on the more important ones.)
ADP/ACP Corrective Distributions: March 15
Plan sponsors that fail to make any corrective distributions due to failed actual deferral percentage and actual contribution percentage (ADP/ACP) tests by this deadline must pay a 10 percent excise tax on the excess contribution amounts.
Funding Certification for Defined Benefit Plans: March 31
If the actuary’s certification of a defined benefit plan’s adjusted funding target attainment percentage (AFTAP) is not completed by March 31, the plan’s AFTAP will be presumed to be 10 percent less than last year’s AFTAP, which could cause distribution restrictions.
Required Minimum Distributions: April 1
If participants who turned age 70 ½ during 2018 do not receive their first required minimum distributions by April 1, the participants may have to pay a 50 percent excise tax. There has been discussion in Congress about changing the age when required minimum distributions begin, but we do not expect any change to be made soon enough to affect the April 1 deadline this year.
Deductible Employer Contributions: April 15
Plan sponsors must contribute any employer contributions to a qualified plan by April 15 in order to deduct those contributions for 2018. This deadline assumes the employer’s tax year is a calendar year. Additionally, this deadline may be extended if the employer requests an extension to file its corporate tax return.
Excess Deferral Distributions: April 15
The deadline to distribute any deferrals from the prior year that exceed the Internal Revenue Code Section 402(g) limit ($18,500, without catch-up) is April 15. If these excess deferrals are not distributed in a timely manner, the plan may risk disqualification and the participant may face double taxation on the amounts (i.e., the excess deferral will be included in the participant’s income in the year of deferral and in the year of distribution). Excess deferrals may arise if a participant contributed to multiple retirement plans during the 2018 calendar year and exceeded the $18,500 limit when combining the deferrals between or among those plans. Unlike the plan contribution deadline above, this deadline may not be extended by either the employee or the employer requesting an extension for filing its tax return.
Annual Funding Notice for Defined Benefit Plans: April 30
The deadline by which plan sponsors must distribute the annual funding notice to defined benefit plan participants and beneficiaries, as well as to the Pension Benefit Guaranty Corporation, is April 30.
The second half of the year will bring its own set of deadlines, and we’ll cover those on the Employee Benefits and Executive Compensation blog in June.