NRECA Employee Benefits Weekly

Verify 401(k) Contribution Pay Dates at Year-end

Posted on Posted in Compliance, Retirement Benefits

Before submitting 401(k) Pension Plan contributions from your cooperative’s year-end 2018 and early 2019 payrolls, remember to compare the pay date shown in NRECA’s system to the one in your payroll system. Usually the dates will match, but if they don’t, adjust the pay date in NRECA’s system to match the pay date in your payroll system. Remember that your system’s pay date and pay period end date may be different.

Here are two examples:

  1. If your paychecks were dated December 31, 2018, then the pay date in NRECA’s system should reflect December 31, 2018, regardless of your pay period end date for that check.
  2. If your pay period end date was December 31, 2018 but the paychecks are dated January 4, 2019, look at the pay date shown in NRECA’s system. If it shows a different date, change the pay date to January 4, 2019 before you submit the contributions. Contributions from paychecks dated on or after January 1, 2019 are for 2019.

Remember 2018 deferral limits
As your co-op makes final contributions for 2018, pay attention to IRS deferral limits for individual 401(k) Plan participants who terminate employment in 2018. In particular, deferrals from the final paycheck of an employee who terminates in 2018 count toward the 2018 limit, even if the employee’s final paycheck is dated in 2019, as described above.

For example, an employee terminates on December 31, 2018 and receives her final paycheck on January 4, 2019. You would send her final 401(k) Plan deferral along with the rest of the co-op’s January 4, 2019 contributions. However, the amount the employee defers from the final paycheck counts towards (and can’t exceed) the 2018 limit. This situation is discussed in more detail in the Winter issue of Benefits Bulletin and in the compliance annual reporting Resource Guide; if you have further questions about planning final deferrals for terminating participants, these resources can help.

If you have additional questions beyond those answered in these resources, call the benefits compliance team at 866.673.2299, option 7 or email us at compliance@nreca.coop.

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