January 2023 – Year End 401(k) Plan Compliance
Year End 401(k) Plan Compliance
With 2022 coming to a close, if your business has a 401k Plan, we would like to remind you about the importance of completing your Third Party Administrator’s (TPA) annual 401(k) data collection request, which includes a census of your retirement plan (Plan) data.
What is a 401(k) Census?
A 401(k) Census is a listing of employment and retirement data that you provide to your TPA so that the TPA can prepare annual testing to ensure the Plan’s compliance with Department of Labor (DOL) and Internal Revenue Service (IRS) rules and regulations.
The census formatting varies slightly for each TPA; however, typical data points include:
– Personnel data for all employees (not just those participating in the 401k plan) such as:
– Employee name
– Birth date
– Hire date
– Termination date
– Payroll data such as:
– Hours worked
– Eligible/plan compensation
– Excluded compensation
– 401k data such as:
– Employee deferrals, separated by traditional versus ROTH contributions and employer contributions.
In the previous listing, it is imperative to ensure that the compensation data remitted is complete and accurate. Each plan defines plan compensation differently, so any uncertainties about the definition of compensation should be discussed with your TPA.
TPAs also perform limit tests to confirm that plan contributions do not exceed the amounts allowed by law (pursuant to the IRC) for that plan year. For the 2022 plan year employee deferrals cannot exceed $20,500, plus catch up contributions of $6,500 for those age 50 or older.
The annual additions test, sometimes referred to as the 415 Limits test, since it falls under IRC Sec 415, tests that the total of employee and employer contributions to the plan year do not exceed the annual limit for each participant. The combined limit for employee and employer contributions for 2022 is $61,000 for each participant.
Additional information on these tests and 401(k) compliance can be found here.
If you have not already received your year-end census/compliance data collection request, you should be receiving it shortly. If you do not, please reach out to your TPA for this information. In order to prepare your business tax return, we will need the information and calculations that your TPA prepares, thus it is necessary for your TPA to complete the annual testing before we can prepare your business tax return. This year-end data request can be completed after your last 2022 payroll is run so there is no need to wait for W-2s to be issued.
Note: if your business files a Form 1065 (files as a partnership for tax purposes), there is an additional step before we can finalize your tax return, as we must send preliminary self-employment income information to your TPA in order for your TPA to finalize their calculation for your 401k plan contributions.
It is imperative that your TPA receives this information as soon as possible and to ensure the data is complete and accurate to avoid delays in your calculation.
If you have any questions on completing your collection request or any other questions relating to your business, please reach out to us.
2023 Soukup Bush Deadlines
FEBRUARY 15, 2023: For our clients who own pass-through entities – please provide all documents and required information for partnership and S-corporation tax returns by February 15, 2023. In order to provide our best service, your tax return will be extended and completed after April 15, 2023 if there is still outstanding information needed by February 15, 2023.
Please Note: extended business returns will be prepared after the individual filing deadline, April 15, 2023. Thus, we will also be filing an extension for your individual return if we extend your business return.
MARCH 10, 2023: For our clients with individual and C-corporation tax returns – please provide all documents and required information for individual and C-corporation tax returns by March 10, 2023. In order to provide our best service, your tax return will be extended and completed after April 15, 2023 if there is still outstanding information needed by March 10, 2023.
2022 Filing Deadlines
JANUARY 31, 2023 – Form 1099 NEC and the related Form 1096 must be filed with the IRS for any non-employee compensation paid
FEBRUARY 28, 2023 – Form 1099 MISC and the related Form 1096 must be filed with the IRS for rents, royalties, or other payments (MARCH 31, 2023 if filed electronically)
MARCH 15, 2023 – Federal and state income tax returns are due for calendar-year flow-through entities, including partnerships and S-Corporations
APRIL 18, 2023 – Federal and state income tax returns are due for individual taxpayers, C-Corporations, and Estates and Trusts
SEPTEMBER 15, 2023 – Federal and state income tax returns are due for flow-through entities, including partnerships and S-Corporations if extended
OCTOBER 2, 2023 – Federal and state income tax returns are due for trusts if extended
OCTOBER 16, 2023 – Federal and state income tax returns are due for individual taxpayers, and C-Corporations if extended
2023 Estimated Payment Deadlines
JANUARY 16, 2023 – 4th quarter estimated payments for 2022 are due to the IRS and Colorado Department of Revenue
APRIL 18, 2023 – 1st quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
JUNE 15, 2023 – 2nd quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
SEPTEMBER 15, 2023 – 3rd quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
EMPLOYEE SPOTLIGHT: GRACE KUCZA
Grace joined Soukup, Bush & Associates in November of 2012. She is responsible for reviewing both individual and business tax returns as well as assisting with attestation engagements. Prior to joining the firm, Grace worked for two years at a public accounting firm in Kansas.
Grace graduated with a Bachelor of Science in Business Administration with a focus in accounting from Trinity University in 2009. While at Trinity, Grace played four years of collegiate soccer and was voted team captain her senior year. She received her Master in Accounting from the University of Kansas in 2010 and received her Certified Public Accounting license in 2013.
Grace enjoys hiking, biking, skiing, and taking photographs with her husband, Mark, and crazy Weimaraner pup, Yuma.