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Employee Benefit Plans – Maintaining Compliance During COVID

MaryPat Davitz

May 15, 2020

If you’re an employer, many of your typical business processes and ways of working have recently fallen to the wayside in the past two months. As dedicated CPAs, we’re here to remind you that maintaining compliance with your company’s retirement plans is imperative during this time.

As employers attempt to find balance and success in this new environment, it is critical to note that ongoing retirement plan requirements are not to be forgotten. Employee Benefit Plans, or EBPs, can fill this time of year with a multitude of tasks, including compliance testing, contribution calculations for corporate tax returns, and preparation for upcoming plan audits. Given this upheaval caused by COVID, allow yourself ample time with HR and payroll to be prepared for upcoming deadlines.

It will be easy to look past internal controls and daunting tasks which take up additional hours in the day. With the new virtual workplaces and teams no longer working in-person collaboration, small details can easily slip through the cracks. Constant communication and precise project management will be essential in maintaining your company’s retirement plan; where even the smallest errors can cause much bigger problems.

Please consider these key issues and action items your teams can ensure are in place, so as not to lose track of important documentation for your plans:

  • 401k withholding’s: Ensure timely deposits. Employers should continue to deposit amounts consistent with their timing prior to COVID.
  • Timely enrollment. Employers should continue to enroll participants as they become eligible under the terms of their plan. This is critical for auto-enrollment provisions and failure to do so may result in more costly contributions down the line.
  • Internal controls processes. Adhere to your processes already in place for the review of plan data and calculations. Now is not the time to forego standards previously instated.
  • Remain diligent. Complete your 2019 plan discrimination testing. The IRS has indicated there will be deadline relief related to these requirements.

A few things to consider as reactions to the COVID environment:

  • If you pay out certain types of unique compensation to employees as a result of COVID, ensure you are cognizant as to how these funds will be treated for plan purposes. Failure to do so may result in more costly contributions down the line.
  • If you unfortunately need to terminate a significant number of staff during this time, a partial plan termination may occur. Plans that have a partial plan termination are required to 100% vest participants that terminate during the year. If you do not abide the rules, you may be forced to replenish the plan for improperly using the account.
  • If you are a large employer and require an audited financial statement as part of your Form 5500, continue your filing to complete your audit. Most audits can be completed remotely and this shouldn’t be an issue as a result of working from home.

We are continuing 2019 audits as planned, and our work has not been impacted by the current crisis. We encourage you to leverage this content as recommendations for how to maintain compliance in this uncharted territory, and ensure your requirements do not slip through the cracks.

If you have any questions about your Employee Benefit Plans, or any concerns on how to maintain compliance during these times, please contact us. We’re here to help you navigate.

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