Marking the fiduciary calendar

Sean Jordan

By Sean Jordan
Sean Jordan is Head of Emerging Client Management for the Workplace Solutions unit of MassMutual.
Posted on Oct 21, 2020

When it comes to calendars, the world is not always on the same page.

The Tibetan calendar, for instance, adds a 13th month every two or three years to line up with the solar year while the Islamic or Hijri calendar runs just 355 days. The Hebrew calendar is specifically relied upon for religious observances, including Jewish holidays and Torah readings.

People around the globe rely on different calendars to mark the year in different ways, each with unique holidays, holy days and other important cultural, religious and historic dates. Some rely on more than one calendar to track their year.

Companies that sponsor 401(k) and other defined contribution plans also have their own calendar – not for holidays necessarily – but to track important fiduciary duties and obligations during the course of the plan year. MassMutual publishes its fiduciary calendar online to help plan sponsors track important deadlines and stay abreast of their fiduciary duties.

The fiduciary calendar marks important dates regarding Qualified Default Investment Alternatives (QDIAs), Safe Harbors, deposit of employee contributions, and other activities that recur annually or more often. The calendar provides a separate list of such activities for quick reference to keep plan sponsors on the same page as regulatory officials.

Sponsors rely on the calendar in cooperation with their financial professional, third party administrator and MassMutual relationship managers to help navigate the plan year. Different plan requirements are sprinkled throughout and missing an important date can create headaches for sponsors.

This year has been especially challenging to stay on top of fiduciary obligations as many sponsors have suspended, restarted, or slowed business operations due to the Covid-19 pandemic. Business disruptions have caused some sponsors and participants to suspend and restart contributions as well.

Congress passed the Secure Act earlier in the year to provide some regulatory relief but sponsors should not assume that they have been absolved of all fiduciary obligations. Quite the contrary.

Whether you follow the Tibetan calendar or, as most of the Western World, the Gregorian calendar, sponsors need to be aware of a few fiduciary obligations before the end of this year:

By Dec. 1, sponsors that offer a QDIA need to notify participants of their rights, including suspension of automatic contributions. The annual notice must be given at least 30 days before each plan year.

Before year-end, sponsors also need to issue Required Minimum Distributions (RMDs) to participants who have started taking distributions for retirement income. That includes participants who received their initial RMD this year by April 1.

If your firm has failed its Actual Deferral Percentage (ADP) or Actual Contributions Percentage (ACP) tests, you must return excess contributions and/or excess aggregate contributions by Dec. 31. If you’re tracking the Hijri calendar, the end of the year comes 10 days earlier (fortunately, the IRS relies on the Gregorian calendar).

Although MassMutual has yet to publish its 2021 fiduciary calendar, there are some important deadlines in the first quarter. The first two involve Forms 1099-R, which must be sent by Jan. 31 for distributions processed in the previous calendar year. By Feb. 28, 1099-B information must be filed with the IRS (March 31 if filing electronically). MassMutual offers reporting services for plans and participants electing benefit payment services.

Although March marks the start of Passover, sponsors should not pass over several dates with fiduciary obligations for their retirement plan. The 15th is the filing deadline for corporate tax returns and employer contribution deductions (unless an extension request is timely filed). It’s also the deadline to make the prior fiscal year corporate employer contribution to the plan to be eligible to take a tax deduction for prior fiscal year. The deadline is based on corporate tax return filing due date (including extensions). If the deadline falls on a weekend or legal holiday, the due date is the next business day.

The end of March is the deadline for corrective action without excise tax for failed ADP and ACP tests, if applicable. Otherwise, Form 5330 must be filed. The statutory correction period is the 12-month period following the close of the plan year for which the test failed.

Those are just some of the important dates tracked by MassMutual’s fiduciary calendar to help sponsors stay on top of their retirement plan obligations. Fortunately, 2020 is a Leap Year, providing sponsors with an extra 24 hours by year’s end to meet their obligations.

Although the world relies on different calendars for different purposes, sponsors need to heed the Gregorian calendar based on the earth’s revolution of the sun as well as the MassMutual fiduciary calendar that revolves around the IRS retirement plan rules.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.