Compliance Corner: Q1 2025 – Deadlines, New Self-Correction Options
Upcoming Deadlines
The end of Q1 2025 means the H&S Plan Administrators are hard at work completing the necessary compliance tasks for our 2024 calendar year plans. If you have received a request for additional information from your H&S Plan Administrator, or if you have not yet completed our annual questionnaire through Plan Sponsor Link, please respond as soon as possible.
Upcoming deadlines in 2025 calendar year plans (including deadlines for plans in operation during 2024):
April 1st – Deadline for initial required minimum distribution (RMD) for participants attaining age 73 in prior year who are RMD eligible.
April 15th – Deadline for plans to refund excess contributions over the 402(g) or 415 limits from the 2024 plan year. For calendar year plans, deadline for C-corps, LLCs taxed as C-Corps, or sole proprietorships to make employer contributions to plan unless the deadline for the employer’s annual tax return is extended.
June 30th – Deadline for refunds to HCE participants due to failed ADP/ACP tests for plans with an eligible automatic contribution arrangement (EACA). After this date a 10% excise tax may apply.
July 31st – Deadline to file Forms 5500, 8955-SSA, and 5330 without extension for calendar year plans.
September 15th – For calendar year plans, deadline to make employer contributions to plan on extension (S-corps, LLCs taxed as S-Corps, or Partnerships). For calendar year Cash Balance Plans, all funding must be completed and PBGC submission made, if applicable.
October 15th – Deadline to file Forms 5500 and 8955-SSA with extension for calendar year plans. For calendar year plans, deadline to make employer contributions to plan on extension (C-corps, LLCs taxed as C-Corps, or sole proprietorships).
Missing Participants – Plan Sponsor Duties
Among the fiduciary duties imposed on the sponsor of a retirement plan is the proper management of the plan assets for the benefit of “participants” in the plan. The definition of participant includes not only current employees but also former employees with a balance in the employer’s retirement plan. The ERISA participant definition creates a continuing duty to former employees long after termination from employment. Once an employee leaves a company contact information for the participant often becomes outdated. It is tempting for plans to simply ignore these missing participants in the hope that someone turns up eventually to claim the funds but with an increased enforcement effort from the DOL this is a potentially costly mistake.
To make sure plan sponsors do not ignore former employees, the Department of Labor (“DOL”) has recently announced that an area of emphasis for audit activity is the investigation of the policies and procedures of plan sponsors to enable the plan to locate and distribute benefits to “missing participants” – i.e., those participants where the plan sponsor no longer has valid contact information or who are otherwise unresponsive. This ongoing duty is another example of why it is beneficial to force-out small account balances through the plan’s automatic rollover rules.
To assist plans in complying with the ongoing fiduciary duty to locate participants, the DOL has issued guidance outlining what it considers best practices to maintain participant data and distribute funds to participants where possible. The DOL’s best practices document is available on the department website:
🔗 Best Practices for Pension Plans – DOL
The DOL breaks down its guidance into four main areas:
1. Maintaining Records
Plan sponsors should maintain and regularly update participant contact information. For active employees this is easier, but for former employees, sponsors must flag and resolve undeliverable mail or uncashed checks, and prompt participants to update their beneficiary forms.
2. Communication Process
Give participants the tools they need to find plan information. This includes clearly labeled mailings, multiple contact methods (phone, web, mail), and using both old and new plan names if changes have occurred.
3. Active Searches
Even though SECURE 2.0 mandates a missing participant database, plan sponsors must still actively search for lost participants. This includes contacting beneficiaries, sending certified mail, using online databases, or hiring commercial search services.
4. Documentation of Procedures
If it isn’t documented, it didn’t happen. Have a written policy and apply it consistently. This ensures your procedures stand up in an audit.
📌 Note: The DOL recently issued Field Assistance Bulletin 2025-01 describing how state escheatment laws may apply to unclaimed retirement funds—only after a good-faith search per DOL guidelines.
New Correction Option for Delinquent Contributions and Loan Payments
Timely deposits of employee deferrals and loan payments are critical fiduciary responsibilities—and frequent audit targets. Historically, the DOL’s Voluntary Fiduciary Correction Program (VFCP) was the official path for self-reporting and correcting late contributions, but it has been a time-consuming and expensive process.
As of January 1, 2025, the DOL now allows for a new, simplified self-correction option under specific conditions:
The lost earnings amount is $1,000 or less (calculated using the DOL’s tool).
The delinquent contributions are remitted to the plan within 180 days of being withheld.
A notice must be filed electronically on the EBSA website to receive acknowledgement.
This new process does not provide a “no action” letter, but it does stop civil penalty accrual and expands self-correction to certain loan errors under the IRS’s EPCRS.
Though it’s a positive step forward, this new correction method still requires documentation and attention to detail. Many plan sponsors may still choose to self-correct informally and retain the documentation for audit defense.
If you are aware of late deferrals or loan payment issues, reach out to your H&S Plan Administrator to explore your options.
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice.
Written by: Sam Dart, on behalf of Hunnex & Shoemaker