The end of the year is the ideal time for business owners to conduct a comprehensive review of their company’s retirement plans. Ensuring that your retirement benefits are aligned with your financial goals and compliant with regulations is essential for you and your employees. We’ll present some items to consider during your year-end review.
1. Contribution Limits –The IRS adjusts contribution limits for retirement plans annually. Review these to ensure that you maximize your contribution and still remain within the allowed limit.
2. Employee Participation –Examine employee participation in your retirement plans. Ensure that your retirement benefits are being effectively communicated to your workforce. Consider conducting employee education sessions to encourage participation and increase employee engagement.
3. Plan Documents and Amendments –Review your plan documents to verify their accuracy and compliance with current regulations. If there have been regulatory changes or if your business’s circumstances have evolved, consider making necessary plan amendments to ensure full compliance.
4. Plan Design and Features –Analyze the design and features of your retirement plans. Evaluate the appropriateness of your plan’s investment options, vesting schedules, and any matching contributions. Ensure that your plan’s structure aligns with your business’s goals and the financial well-being of your employees.
5. Fiduciary Responsibility –Ensure that you are meeting your fiduciary responsibilities. Review your investment options, fees, and the overall performance of the retirement plans. Evaluate whether the plan’s fees are reasonable and whether the investment options offer diversity and quality.
6. Employee Contributions and Deferrals –Encourage employees to review and adjust their contributions and deferral rates. The year-end is an excellent time for employees to revisit their retirement savings goals and make changes accordingly.
7. Non-Discrimination Testing –Review plan reports to ensure your plan complies with IRS regulations regarding contributions and benefits. Non-discrimination testing ensures that the plan doesn’t unfairly favor highly compensated employees.
8. Auto-Enrollment and Auto-Escalation –Consider implementing auto-enrollment and auto-escalation features in your retirement plans to boost employee participation and savings rates. These features encourage employees to save more to build a more secure financial future.
9. Beneficiary Designations –Recommend that employees view and update employee beneficiary designations to ensure that the designated beneficiaries are still accurate. A year-end review of your business retirement plans is crucial to optimizing retirement benefits for both you and your employees. It also helps ensure compliance with current regulations and best practices.