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

Before submitting 401(k) Pension Plan contributions from your cooperative’s year-end 2016 and early 2017 payrolls, remember to compare the pay date shown in NRECA’s system to the one in your payroll system (usually the paycheck date). If they don’t match, adjust the pay date in NRECA’s system to match your pay date. Remember that your pay date may be different from your payroll end date.

Here are two examples:

1. If your paychecks were dated December 30, 2016, then the pay date in NRECA’s system should reflect December 30, 2016.
2. Contributions from paychecks dated on or after January 1, 2017 are for 2017. So, for example, if your pay period end date was December 31, 2016 but the paychecks are dated January 6, 2017, verify that the pay date shown in NRECA’s system for those contributions is 2017. If it isn’t, change the pay date to January 6, 2017 before submitting the contributions.

Remember 2016 deferral limits
As your co-op makes final contributions for 2016, pay attention to IRS deferral limits for individual 401(k) Plan participants. In particular, deferrals from the final paycheck of an employee who terminates in 2016 count toward the 2016 limit, even if the employee’s final paycheck is dated in 2017. For example, an employee terminates on December 31, 2016 and receives her final paycheck on January 6, 2017. You would send her final 401(k) Plan deferral along with the rest of the co-op’s January 6, 2017 contributions. The amount the employee defers from the final paycheck counts towards and can’t exceed the 2016 limit.

For more information about how to send 401(k) Plan contributions, visit the Employee Benefits website.

For questions about 401(k) Plan deferral limits or planning deferrals for your terminating employees, call the benefits compliance team at 866.673.2299, option 7 or email us at compliance@nreca.coop.