Is your Employee Benefit Plan compliant with your Plan document, ERISA, and IRS regulations? Year-end reviews not only protect fiduciaries from compliance risk but also help employees receive the benefits they’ve earned. Here are seven key areas to focus on before your Plan’s year-end.

Six Key Areas to Address Before Year-End

1. Employee Eligibility and Enrollment

Have all eligible employees been properly entered into the Plan? Review eligibility criteria in your Plan document such as,  age, service, and hours worked. For example, employees may qualify on the first day of the quarter after completing a year of service and reaching age 21. Double check:

• Newly eligible employees have been offered enrollment.
• Long-term employees who now meet hour-based requirements are included. 

2. Involuntary Cash-Out Provisions

 Most Plans include provisions allowing distributions of small account balances without participant consent (commonly under $5,000). Using this feature:

• Reduces administrative burden.
• Helps plans with fewer than 120 participants as of the first day of the Plan year potentially avoid a full audit requirement. 

3. Employer Matches and Compensation Definitions

Verify that contributions follow your Plan’s definition of eligible compensation. Additionally, check that employer matching contributions are accurate and consider a year-end “true-up” to ensure employees who max out contributions mid-year still receive the full matching benefit. For 2025, contribution limits are:

• Elective deferrals: $23,000
• Catch-up deferrals (age 50+): $7,500 (or $11,250 if the “super-catch-up” provision of SECURE Act 2.0 has been adopted)
• Total employer + employee contributions: $69,000 ($76,500 with catch-up; $80,250 with super catch-up) 

4. Timely Remittance of Employee Deferrals and Loan Repayments

The DOL requires employee deferrals (and any loan repayments) to be remitted to the Plan as soon as administratively feasible, generally within a few business days. Late remittances are considered prohibited transactions and can lead to penalties. Before year-end:

• Review payroll remittances to confirm deferrals and loan repayments were deposited timely.
• If any late deposits are identified, work with your third-party administrator to determine necessary corrections, including lost earnings calculations and reporting.

Document corrective actions for audit readiness.

5. Required Documents and Filings

Keeping documents up to date is crucial for compliance and audits. Ensure required documents are current and filings are complete: 

• Summary Plan Description (SPD): Confirm the SPD reflects the latest Plan provisions and communicates participant rights clearly.
• Form 5500: For calendar-year plans subject to ERISA, the Form 5500 is due July 31. Confirm it has been filed or is scheduled for submission.
• Plan Amendments: Update promptly for regulatory or Plan design changes.

6. Independent Investment Review

Fiduciaries are responsible for monitoring plan investments and fees. Best practice is to: 

• Engage an independent investment advisor.
• Benchmark plan performance and evaluate fee.
• Document all analysis and retain records for audit protection.

7. Recordkeeping and Documentation

Are all board minutes properly documented? Ensure all actions regarding the Plan are recorded in board minutes, demonstrating proper oversight and board approval.

Why a Year-End Checkup Matters

Performing a proactive year-end review protects fiduciaries, minimizes compliance risk and ensures employees receive the benefits they’re entitled to. Catching issues now can prevent costly corrections and position your retirement program for success in 2026.

FAQs: Year-End Employee Benefit Plan Tasks

1. Who should perform a year-end review? 

   Plan Sponsors, administrators, and fiduciaries should all participate to ensure compliance and accurate recordkeeping.

2. Can involuntary cash-outs apply to older balances? 

   Yes, if the Plan allows, separated participants with balances below the Plan threshold can be distributed without consent.

3. What if employees reach the 401(k) limit mid-year? 

   Consider a year-end true-up to ensure employer matching contributions are applied to the remaining eligible compensation.

4. Are independent investment reviews required? 

   While not mandatory, they are strongly recommended to meet fiduciary responsibilities and document reasonable fees and investment performance.

5. How often should Plan documents be updated? 

   At least annually, or whenever regulatory or Plan provision changes occur.

6. Why is documenting board minutes important? 

   Minutes provide evidence of fiduciary oversight and approval of all Plan actions, which is crucial in the event of an audit or compliance review.