Year-End Employee Benefit Plans: Key Deadlines and Compliance Tips for Employers
Why Year-End Matters for Employee Benefit Plans
The end of the plan year, often December 31 for calendar-year plans, is a critical period for benefit administration. While some plans may follow a fiscal year, most plans operate on a calendar-year basis. Year-end significance arises from several factors:
- Completion of open enrollment periods in October or November.
- Amendment deadlines for any plan design changes.
- Required elections and notices for the upcoming year.
This period allows employers to finalize all necessary tasks to ensure smooth plan operation in the following year.
Form 5500 and Summary Annual Reports
After filing the Form 5500, many plans prepare the Summary Annual Report (SAR) for participants. This document summarizes key data from the Form 5500 and fulfills ERISA’s transparency requirements. It is a critical step for keeping participants informed and maintaining compliance.
Time-Sensitive Filings and Elections
Certain filings and elections must be completed before year-end:
- Retirement plan notices, such as safe harbor and auto-enrollment notices.
- Discretionary amendments to plan design changes, which must be adopted before the effective date.
- Interim amendments required by IRS law changes (none due for 2025, but upcoming for 2026).
- Health and welfare plan elections, including cafeteria plans and flexible spending account contributions.
Unlike retirement plan amendments, cafeteria plan changes must be adopted before the start of the plan year, ensuring compliance for the upcoming year.
Preparing Early for Year-End Benefit Tasks
Employers are advised to start planning in early September, especially for calendar-year plans. This includes reviewing open enrollment requirements, planning amendments, and coordinating with HR, benefits groups, and third-party administrators. Mid-year or early Q4 meetings with advisors help anticipate discretionary changes and ensure smooth implementation of new legal requirements.
Roles and Responsibilities for Year-End Compliance
Ultimately, the plan sponsor holds responsibility for compliance, but logistics may involve:
- HR departments or benefits groups.
- Office managers or business owners in smaller companies.
- Third-party administrators or employee benefits counsel.
Maintaining clear communication with these stakeholders is crucial for timely and accurate completion of year-end tasks.
Common Year-End Oversights
Frequent mistakes include:
- Missing amendments or failing to obtain proper signatures.
- Sending notices late.
- Poor time management leading to stress and compounding errors.
Proactive planning and regular communication with providers are essential to avoid these pitfalls.
Consequences of Missing Deadlines and Correction Programs
If year-end deadlines are missed:
- Retirement plans can often be corrected through IRS or Department of Labor correction programs.
- Health and welfare plans lack formal correction programs, so remedies are handled in good faith to restore participant rights.
Quickly identifying errors and contacting counsel reduces costs and minimizes compliance risks.
Key Regulatory Updates for 2026
Significant updates affecting retirement and health benefits include:
- Catch-up contributions over $145,000 must be made on an after-tax (Roth) basis for eligible employees over 50.
- Participant-directed retirement plans now require at least one annual paper statement, despite trends toward digital communication.
- Student loan repayment reimbursements may now be included under educational assistance plans.
- Dependent care flexible spending account limits increase from $5,000 to $7,500 per year.
Employers must plan for these updates, communicate changes, and ensure proper system implementation before the new plan year begins.
Conclusion: Staying Compliant and Prepared
Doll Lank and Kathleen Salas Bass emphasize that careful planning, early preparation, and collaboration with counsel and third-party administrators are key to a successful year-end. Employers who stay organized and proactive can ensure compliance, reduce stress, and avoid costly mistakes.
For more information and assistance with year-end benefit plan compliance, visit klblawgroup.com to connect with Doll and Kathleen.