Tax-exempt Co-ops: Send 401(k) True-Up Contributions Now

If your cooperative is tax-exempt, remember to send any needed true-up contributions for participants in your 401(k) Pension Plan to NRECA as soon as possible, but no later than July 15, 2020. Making the correct annual employer contribution for each participant ensures that you are complying with your plan elections and facilitates accurate nondiscrimination testing, which is currently underway.

The usual deadline for tax-exempt co-ops to send true ups is May 15, which is the due date (without extension) to file IRS Form 990. However, in response to the COVID-19 pandemic, the IRS issued IRS Notice 2020-23 to extend the 2019 due date to July 15, 2020. If participants at your co-op need true-ups, sending them to NRECA sooner will allow the benefits compliance team to finish your 2019 testing sooner.

True-up reminders:

First, review the 401(k) employer contributions you made for each participant during 2019. Follow the review and true-up instructions on the Employee Benefits website.
Pay special attention to anyone who terminated employment, took a hardship distribution, moved on or off disability, or changed their deferral rates during 2019. It can be easy to overlook employees who terminated during the year and are no longer on your payroll, so make a note to include and review their employer contributions.
Send a true-up contribution by July 15 for anyone who did not receive the correct employer contribution amount, as calculated according to the formula in your plan adoption agreement.

Note that the true-up deadline for taxable co-ops was March 15 (unless you filed an extension). If you missed the March 15 deadline but still need to send true-up contributions, please send them right away and notify the benefits compliance team that you’ve sent them.

If you have specific questions about calculating the employer match or true-up contributions, contact the benefits compliance team at 866.673.2299, option 7, or pension.compliance@nreca.coop.