Year-end compliance issues for single-employer defined benefit and defined contribution retirement plans
By the end of 2024, sponsors of calendar-year single-employer retirement plans must adopt necessary and discretionary plan amendments to ensure compliance with statutory and regulatory requirements of the tax code and the Employee Retirement Income Security Act of 1974 (ERISA). This Client Action Bulletin looks at key areas—including administrative compliance—that defined benefit (DB) and defined contribution (DC) plan sponsors should address by December 31, 2024.
Qualified plan amendments
Amendments for discretionary plan provision changes
Employers that sponsor retirement plans should review their plan documents before the end of 2024 to ensure that discretionary or operational features comply with ERISA and the Internal Revenue Code (IRC). Except as noted below, qualified plan sponsors that made discretionary plan changes during 2024 must formally adopt plan amendments by December 31, 2024. In addition, a review of whether required or discretionary amendments relating to plan years prior to 2024 have been adopted and executed on time should be considered as part of any year-end plan review.
Required amendments for legislative and regulatory changes
Although several changes related to the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the SECURE 2.0 Act are already required to be in place operationally, and plans that opted to offer the coronavirus-related relief afforded in 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act operated accordingly during the period of relief, the deadline for amendments reflecting these changes was further extended by IRS Notice 2024-02. The deadline for adopting plan amendments made pursuant to SECURE 2.0 as well as the SECURE Act and CARES Act has generally been extended from the last day of the first plan year beginning on or after January 1, 2025, to no later than December 31, 2026 (the deadline is further extended to December 31, 2028, for collectively bargained plans and to December 31, 2029, for governmental qualified plans and public school 403(b) plans). Please refer to our Client Action Bulletin about Notice 2024-02 for more details on the amendment deadlines. However, these deadlines do not apply if a plan is terminating. If the plan termination date precedes these deadlines, any required amendments must be adopted by the time of the plan termination.
Plan sponsors of certain individually designed plans should check to see whether any plan amendments are required in order to comply with the Internal Revenue Service (IRS) Required Amendments List (RAL). The RAL is the annual list of all the amendments necessary for individually designed plans to retain their tax-qualified status. Generally, plan sponsors must adopt any item placed on the RAL by the end of the second calendar year following the year the RAL is published. For amendments in the 2022 RAL (Notice 2022-62), the deadline is December 31, 2024.
The RAL is divided into two parts.
- “Part A covers changes in requirements that generally would require an amendment to most plans or to most plans of the type affected by the change.”
- “Part B includes changes in requirements that the U.S. Treasury Department and the IRS anticipate will not require amendments to most plans but might require an amendment because of an unusual plan provision in a particular plan. For example, if a change affects a particular requirement that most plans incorporate by reference, then Part B would include the change because a particular plan might not incorporate the requirement by reference and, thus, might include language inconsistent with the change.”
The 2022 RAL did not include any changes that require amendments to an individually designed single-employer retirement plan by December 31, 2024.
Correcting failures to amend a retirement plan on time
If a plan sponsor discovers a failure to adopt either a required or discretionary plan amendment, it should consider correcting the mistake through the IRS’s Employee Plans Compliance Resolution System (EPCRS). See IRS Revenue Procedure 2021-30.1 Last year the IRS issued Notice 2023-43, providing interim guidance on the expansion of EPCRS, which allows plans to self-correct certain Eligible Inadvertent Failures (EIFs) under Section 305 of SECURE 2.0. Plan sponsors may be able to self-correct EIFs without contacting the IRS or paying a fee, provided the corrective action is taken in a timely manner.
If an EPCRS filing is required to correct a plan amendment failure under the IRS Voluntary Correction Program (VCP), then the filing fee (user fee) ranges from $1,500 to $3,500, based on the amount of plan assets, and can be substantially less than the monetary sanctions that may be assessed if the IRS audits the plan and discovers a late amendment or a failure to adopt an amendment.
Participant notices, disclosures, and benefit statements
Plan sponsors should ensure they make available or distribute certain information to participants by the following dates.
| Due date | Action | DB Plans | DC Plans |
|---|---|---|---|
| October 3, 2024 | Earliest date to provide 2025 calendar plan year annual notices to participants, including 401(k) or 403(b) safe harbor, automatic enrollment (plans with automatic contribution arrangements [ACAs] or eligible automatic contribution arrangements [EACAs]), qualified automatic contribution arrangements (QACAs) safe harbor, and qualified default investment alternative (QDIA), i.e., from 30 to 90 days prior to the beginning of the new plan year. | Yes | |
| October 15, 2024 | Last day to provide a notice to terminated vested participants describing deferred vested retirement benefits (in conjunction with Form 8955-SSA). | Yes | Yes |
| Deadline for DB small plans (i.e., covering 100 or fewer participants) to distribute Annual Funding Notice. (Or the date Form 5500 is filed, if earlier.) | Yes | ||
| October 31, 2024 | For DB plans, provide a notice of IRC Section 436 benefit restrictions to plan participants if the September 30, 2024, certified or deemed adjusted funding target attained percentage (AFTAP) is less than 80% and the notice was not previously provided. | Yes | |
| November 14, 2024 | Distribute third-quarter 2024 benefit statements to participants if the individual account plan gives participants the right to direct their investments. | Yes | |
| November 15, 2024 | For partnerships, DC plans and DB plans not covered by the Pension Benefit Guaranty Corporation (PBGC) (e.g., “professional service employers” with fewer than 26 employees), with calendar plan years, must distribute the distribute to participants the 2023 Summary Annual Report (SAR) if no IRS Form 5558 was filed to extend the Form 5500 due date, but an extension request (IRS Form 7004) was filed on time for the employer’s income tax return (IRS Form 1065 partnership income). | Yes | Yes |
| December 2, 2024 | 401(k) or 403(b) safe harbor notices, automatic enrollment notices, and qualified default investment alternative (QDIA) notices, if applicable. | Yes | |
| Employee Stock Ownership Plans (ESOPs) must provide a diversification notice to participants first eligible to divest publicly traded employer securities on January 1, 2025. | Yes | ||
| December 15, 2024 | DC plans and DB plans not covered by the Pension Benefit Guaranty Corporation (PBGC), with calendar plan years (e.g., “professional service employers” with fewer than 26 employees, electing church groups, etc.), must distribute to participants the 2023 Summary Annual Report (SAR) if the 2023 Form 5500 due date was extended by an IRS extension request that was filed on time, either: an IRS Form 5558 to extend Form 5500; an IRS Form 7004 to extend a corporate employer’s income tax return (IRS Form 1120); or an IRS Form 8868 to extend a tax-exempt employer’s information return (IRS Form 990). | Yes | Yes |
| December 31, 2024 | DC plans that allow participants to direct their investments must provide a statement—if not included in a summary plan description (SPD)—that the plan fiduciaries are relieved of liability for certain losses resulting from participants’ exercise of their rights to direct their investments; the document must include information about the availability of any investment advice services the plan sponsor offers. | Yes | |
| DB plans must provide benefit statements every three years or an annual notice explaining how participants may obtain statements. | Yes | ||
| January 13, 2025 | DB plans subject to ERISA and the tax code must post on the sponsor’s existing intranet site Parts I and II of the 2023 Form 5500 and the Schedule SB within 90 days after the date the Form 5500 is filed (by January 13, 2025, if Form 5500 was filed on October 15, 2024). However, the IRS has extended the deadline for Form 5500 filing (including Form 8955-SSA) for businesses located in areas designated by the Federal Emergency Management Agency (FEMA) as qualifying for assistance due to recent natural disasters. | Yes |
Other operational action items
Other items that are required or which may apply during the last quarter of 2024 are shown below.
| Due date | Action | DB Plans | DC Plans |
|---|---|---|---|
| October 1, 2024 | Certify the DB plan’s 2024 plan-year adjusted funding target attained percentage (AFTAP), if the plan used a “range” certification. (Note: A failure to meet this deadline will result in the AFTAP for the plan year being deemed less than 60% retroactively to October 1, 2024.) | Yes | |
| October 15, 2024 | IRS deadline to adopt a retroactive plan amendment to correct an Internal Revenue Code Section 410(b) coverage or Section 401(a)(4) nondiscrimination failure for a 2023 calendar plan year. | Yes | Yes |
| Deadline for third 2024 minimum funding quarterly installment payment for DB plans that had a funding shortfall in 2023 (i.e., due 15 days after the last plan-year quarter-end). | Yes | ||
| A 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 after the month the plan year began). | Yes | ||
| Deadline for filing 2023 calendar plan year Form 5500 after a plan files Form 5558 to request an extension. | Yes | Yes | |
| Extended deadline to (1) file Form 1120, and (2) deposit tax-deductible contributions for qualified plans for sponsors that filed a corporate tax extension (Form 7004). (Deadline to deduct contributions for 2023 plan year.) | Yes | Yes | |
| Last date to file 2023 calendar plan year Form 8955-SSA (with extension). (2½-month extension if Form 5558 was filed on time). | Yes | Yes | |
| File PBGC Form 10 if the September 15, 2024, final contribution for plan year 2023 was missed, unless PBGC Form 200 was already filed or a waiver applies. | Yes | ||
| October 25, 2024 | File PBGC Form 200, if plan sponsor failed to make an October 15, 2024, required contribution on time that resulted in more than $1 million in cumulative unpaid contributions. | Yes | |
| November 14, 2024 | File PBGC Form 10 if October 15, 2024, required quarterly contribution was missed, unless PBGC Form 200 was already filed or a waiver applies. | Yes | |
| November 15, 2024 | File IRS 2023 tax-exempt organization information return if the Form 990 filing date was extended by Form 8868. | Yes | Yes |
| December 2, 2024 | Deadline to elect safe harbor status for the current plan year with nonelective contributions if the nonelective contribution is less than 4% of compensation. | Yes | |
| December 31, 2024 | Required Minimum Distributions (RMDs) for 2024 are due to participants who were age 72 and older prior to January 1, 2023. | Yes | Yes |
| Deadline for correcting a failed actual deferral percentage (ADP) or actual contribution percentage (ACP) test. To maintain a 401(k) plan’s qualified status due to a failed 2023 calendar plan year ADP or ACP test, (1) pay to all affected participants any ADP/ACP distributions needed to correct the failure; or (2) make a qualified nonelective contribution (QNEC) to all non-highly compensated employees (NHCEs). | Yes | ||
| Deadline to adopt discretionary amendments to the plan, subject to certain exceptions—e.g., anti-cutbacks. | Yes | Yes | |
| 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. | Yes | ||
| Deadline to elect safe harbor status for the prior plan year with a nonelective contribution of 4% or more of compensation. | Yes | ||
| Deadline for use of forfeitures for DC plans under which the plan provides for use of a forfeiture account (according to the timing specified in the plan document, but no later than 12 months after the close of the plan year in which the forfeitures are incurred). | Yes | ||
| Deadline to certify 2024 AFTAP if plan used a “range” certification. Failure to certify AFTAP by December 31, 2024, will result in AFTAP for plan year 2024 being deemed under 60% retroactively to October 1, 2024. | Yes | ||
| Deadline to elect to reduce plan’s carryover and/or prefunding balance as of January 1, 2024, by providing an irrevocable written notification to the plan’s enrolled actuary and the plan administrator. | Yes | ||
| Deadline to revoke a prior election to use a carryover and/or prefunding balance to meet minimum funding requirements for 2024, by providing written notification to the plan’s enrolled actuary and the plan administrator. | Yes |
A full list of 2024 key administrative dates and deadlines for DB and DC plans is found here. The 2025 calendars will be published soon.
For assistance with year-end compliance reviews, plan amendments, or preapproved plan availability, please contact your Milliman consultant.
1 SECURE 2.0 directs the Secretary of the Treasury to revise IRS Revenue Procedure 2021-30 by December 29, 2024, two years after the law’s enactment.