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This article was adapted from a presentation by BerryDunn’s Art Thatcher and Lisa Wolff at the Joint Carolinas Annual Conference in 2023.

As parks and recreation agencies nationwide undertake the master planning process, a greater focus than ever is being placed on ensuring that all members of their communities have a say in the process. BerryDunn’s parks and recreation consultants have partnered with many clients in this area and we wanted to offer some tips on how to create equitable engagement with your community.

What is equitable engagement?

Equitable engagement is a framework for understanding why equity is meaningful, and consists of tools, strategies, practices, and processes to operate equitably, both internally and externally. It is an evolving resource and one based on the needs and desires of your community. It’s important to note that it is not a one-size-fits-all solution, and may not solve all issues related to equity.

Creating a comprehensive engagement strategy

Creating a comprehensive engagement strategy involves understanding your audience and identifying their preferences by crafting and tailoring experiences across multiple outlets. For many agencies, it may begin with the acknowledgment that previous efforts with engagement may or may not have been successful. It’s important to rethink your strategy with the goal of communication saturation—that is, finding ways to reach areas of your community that are hard to reach in traditional ways.

A proven way to ensure that the message is reaching everyone in an equitable way is through the mixed methods information gathering approach. This approach incorporates a wide range of communication channels through leveraging resources such as social media, email campaigns, events, and personalized content to foster meaningful interactions. This method alleviates bias in communicating only with certain groups of people (for example, online-only communication leaves out people who don’t regularly use computers in their day-to-day lives).

The great thing about the mixed methods communication approach is that you have the opportunity to think creatively, and ultimately there are many methods to choose from. Think about your community and choose the methods that will reach the largest number of people, ensuring you get a wide and diverse representation. Below are some options to consider:

In-person events

In-person events are a great way to meet community members where they are. You can host your own events, such as coffee breaks or town halls (both in-person and virtual) or get out to events that are already well attended, such as farmer’s markets, youth sports games, day camps, and seasonal events. You can also have comment or voting boxes set up at public meetings or other community events where people can provide their comments whenever it’s convenient for them.

Surveys

Mailed or email surveys to households in your community can be effective at reaching community members who are actively using park and recreation facilities, as well as those who are not. They provide accurate insights into community preferences, needs, and levels of satisfaction. Hearing from those who are not actively using your facilities gives you an opportunity to hear about why they aren’t, and potentially make changes to accommodate their interests. Valid surveys help to prioritize initiatives that resonate most with the community, ultimately enhancing participation and satisfaction in parks and recreation programs and facilities. It is important to note that you will need to ensure that the survey is statistically valid prior to acting on any recommendations and be sure to thoroughly analyze the survey results.

Stakeholder involvement

For situations where you are having a difficult time acquiring feedback from or access to certain segments of the community, the best approach is to find influential members of that community, or organizations that are trusted by the community, and partner with them. Their involvement fosters ownership and commitment, leading to representation of diverse perspectives from community members that leads to a more sustainable and effective outcome for planning and management of parks and recreation organizations.

Youth engagement

Given that a large proportion of your parks and recreation users are youth in the community, it’s important to engage directly with younger people to hear what they’d like to see offered. We’ve seen excellent examples of youth engagement. You can facilitate a program or pop-up activity to design their “dream park” using craft materials. You might be surprised to find great ideas from the youngest members in your community! You can also meet with day camp or after-school participants to ask questions and guide them through discussion.

Online engagement

Online or virtual engagement is an effective way to reach many people and may be the most convenient way for some to provide feedback, particularly those who work off hours or do not often visit places in the community. We frequently use online tools when we partner with clients on their community engagement efforts. One tool we have found helpful and easy to use is Social Pinpoint. It’s similar to a virtual bulletin board where people can answer questions by posting their feedback and ideas in a public forum where others can then upvote if they agree. Links to these types of tools can be housed on your website or you can use QR codes or short URLs and print them on promotional materials, such as postcards or posters.

While there are many ways to engage your community, finding the best methods is part of the process. BerryDunn’s experienced parks and recreation team partners with organizations across the United States to help them strengthen operations, innovate, and enhance services that benefit their communities. Our expertise includes strategic and master planning, cost recovery, feasibility studies, community engagement, and organizational and operational assessments for parks, recreation, and library organizations.

If you have questions about improving community engagement or questions about your specific organization, please reach out to our Parks, Recreation, and Libraries team. We’re here to help.

The rule will help ensure credibility and integrity of automated valuation models. 

On July 17, 2024, the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Authority (FHFA), Federal Reserve Board (FRB), National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) issued a final rule, quality control standards for automated valuation models, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The final rule will implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing a consumer’s principal dwelling that secures certain mortgages. Click here for the FDIC’s press release, which includes more information on the AVM quality control standards as well as a copy of the final rule. The final rule will become effective on the first day of the calendar quarter following 12 months after the publication in the Federal Register. 

Read this if you are an IT director, information security officer, compliance officer, risk manager, or organizational leader interested in enhancing resilience and robust continuity strategies.

Organizations today must have the capacity and capability to respond and recover from unforeseen disruptions in a timely manner. A Disaster Recovery Plan (DRP) acts as a guide for businesses, outlining strategies to mitigate risks, limit downtime, and expedite the recovery process during a disaster. 

Here are 10 must-have components to include in your organization’s DRP:

1. Purpose and objectives: Define the plan’s primary goal, which should be focused on strengthening the organization's resilience and continuity during disasters. The goal outlines objectives like minimizing downtime, safeguarding critical assets, and expediting recovery processes.
2. DR team and responsibilities: Designate the individuals responsible for plan implementation, clearly defining their roles and responsibilities during disasters. Include their contact information and escalation procedures to promote timely, coordinated responses and decision-making.
3. Disaster definitions and scenarios: Define various types of disasters that could impact the organization and establish criteria for declaring a disaster.
4. Notification and communication: Detail the procedures for alerting key personnel and stakeholders in the event of a disaster, including contact lists, communication methods, and escalation protocols to promote timely response and coordination. 
5. Business Impact Analysis (BIA): Identify critical business functions and assess the potential consequences of disruptions, prioritize recovery efforts based on the impact, and identify Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) for each function. Recovery Time Objectives (RTOs) refer to the maximum acceptable time it takes to restore a system or service after a disruption. It defines the time frame within which operations must be resumed to avoid significant consequences. A Recovery Point Objective (RPO) is the acceptable data loss tolerance in the event of a disruption. It specifies the maximum amount of data that an organization is willing to lose, determining the point in time to which systems and data must be recovered to resume normal operations.
6. Emergency procurement: Outline procedures for obtaining necessary resources and supplies during a disaster, including authorization protocols, supplier contacts, and procurement methods to facilitate the efficient acquisition of essential goods and services in the event of a disaster. 
7. Reconstitution: Detail the steps and processes for restoring normal operations after a disaster, including the sequence for bringing systems, applications, and infrastructure back online, as well as any post-recovery testing and validation procedures to confirm functionality and resilience.
8. Distribution: Specify how the plan is distributed to relevant personnel, stakeholders, and external parties, outlining methods of dissemination, version control, and accessibility during emergencies.
9. Testing: Outline the schedule, procedures, and objectives for regular testing and exercises to validate the effectiveness of the plan in mitigating disaster impacts, identifying weaknesses, and preparing personnel for response and recovery actions.
10. Maintenance: Detail the processes and responsibilities for regularly reviewing, updating, and revising the plan to reflect changes in technology, infrastructure, personnel, and business processes, maintaining its relevance and effectiveness in mitigating the impact of disasters.

For more information on disaster recovery planning or if you have questions about your specific situation, please don’t hesitate to contact our cybersecurity consulting team. We’re here to help.

Read this if you work at a not-for-profit (NFP) organization.

BerryDunn’s annual Not-for-Profit (NFP) Recharge event highlighted a wide array of information to support the NFP industry sector. Each year, attendees are asked to identify their top concerns for their NFP organizations. This annual survey provides insight into the real-time concerns of nearly 200 nonprofit leaders from across the country. At Recharge 2024 (you can access presentations from the event here), survey results showed a continued trend by respondents to a financial stabilization focus. 

The 2024 survey results indicated financial stability was a top concern for 69% of respondents, with employment issues listed by 51% of the respondents. This is a switch from 2023, where employment issues held the top spot. 

This continued decline in concern for employment issues (down from a high of 78% from the 2022 survey) is remarkable in the current climate of relatively low unemployment, continued turnover within the industry, and Department of Labor changes to salary exemption rules for overtime.

Overall, the top four concerns for NFP industry leaders were:

Investment in technology

Despite the additional cost of technology investment, the increasing focus on technology (48% of respondents highlighted tech as a top concern) appears to be in recognition that doing nothing in the tech space can cost more (through wasted hours, increased security risks, etc.) than investing in technology. At Recharge 2024, we highlighted some of the trends, benefits, and risks of AI in the current environment.

Organizational development

Concerns around organizational development (a concern for 40% of respondents) seem to represent increased interest in strategic planning, NFP programmatic partnerships, retirement planning, and expanded ESG opportunities. In addition to the survey results and industry update, attendees of Recharge 2024 learned more about the renewable energy tax credit, updates within the accounting sector, trends and opportunities in artificial intelligence, and a fresh look at employee benefit plan opportunities. 

The nonprofit sector continues to move forward with an eye toward long-term stability with a mission focus and a cautious growth mindset. Please contact our NFP team with questions. We’re here to help.

Recharge 2024 event resources
Nonprofit Insights podcast and other resources

Read this if you work in finance at a renewable energy company.

The renewables industry includes some fairly unique accounting and financial reporting considerations that aren’t as common in other industries. It is important that the accounting function for these companies has an understanding of these concepts to avoid surprises when brought up by their financial auditor or a third party during due diligence. Here are a few of the more common issues we encounter when working with clients:

• Company structure 
  The ownership structure for renewable energy projects can be somewhat complex, as they are typically modeled to direct certain tax benefits to investors. There may be issues with variable interest entities, and some structures provide percentages of ownership which may change over time or flip between investors. Because of this changing ownership, owners typically will allocate the equity of the controlling and noncontrolling interests based on the hypothetical liquidation of the project at book value (referred to as “HLBV”) at each year-end. HLBV is not a method prescribed by US GAAP and is only used if it is determined to be appropriate and consistent with the economic substance of the allocation.
• Power purchase agreements (PPAs)
  PPAs may need to be evaluated if they contain a lease. Accounting Standards Codification (ASC) 842 Leases provides the criteria for what meets the definition of a lease. Under the Implementation Guidance and Illustrations in ASC 842, an example is provided of a contract between a power company and a solar farm where the power company agrees to purchase all the electricity produced by the solar farm; based on the fact pattern provided, the contract is determined to contain a lease. It is important to understand the circumstances and contractual provisions that lead to the determination a contract is a lease versus what leads to the determination that the contract is not a lease.
• Asset retirement obligations (AROs) 
  Renewable energy companies that construct and operate an asset (such as a solar farm) on land that is leased from another party may have a legal obligation to restore the land to its original condition at the end of the lease. Here is more information on AROs.
• Land leases 
  Companies may enter into land leases during the development phase of renewable projects. These agreements should be analyzed closely to determine whether they fall under ASC 842 Leases. There are a number of things to consider when looking at land leases, such as whether the lease gives the company the right to control an identified asset and whether the company has the ability to terminate the lease without incurring a significant penalty.
• Revenue recognition for renewable energy credits (RECs)
  Revenue recognition related to the sales of self-generated renewable energy credits (RECs) can also present some accounting challenges when determining when revenue can be recognized in accordance with US GAAP. RECs generated by project assets sometimes need to go through a certification process that delays the actual sale of the REC; depending on the circumstances, including whether or not the project company has a contract to sell the RECs generated, revenue for RECs may be recognized over time (as power is generated) or at a point in time (when the RECs are actually transferred to a customer).

While this list isn’t exhaustive, it can help you find areas to focus on when preparing your financials. If you have questions about financial reporting for your company or need support for your accounting, financial reporting, or tax needs, please contact our renewable energy team. We’re here to help.

As just about any school that files a Form 990 will tell you, the Schedule B is one of the more cumbersome areas of the entire return. Schedule B requires the disclosure of every single donor (be it an individual, an entity, or a governmental unit) who contributed $5,000 or more during the organization’s tax year, including their name, address, and the amount contributed, including even more detail and description if the donation is of something other than cash. For larger educational institutions that can receive hundreds of such disclosable donations in a given year, the Schedule B reporting onus can become downright brutal. However, there is a special rule available for Schedule B reporting that could greatly reduce that requirement. Fundraising and development departments rejoice!

Unlocking the special rule for Schedule B reporting increases the threshold for reporting contributions on Schedule B from every donor of $5,000 or more to only those contributors whose contributions exceed 2% of total contribution revenue reported on Page 1 of the Form 990. In order to use the special rule, schools must be able to pass the Form 990, Schedule A, Part II Public Support test.

Schedule A, Public Charity Status and Public Support, is required to be filed by all §501(c)(3) organizations. Part I denotes the organization’s Reason for Public Charity Status. Typically, educational institutions check off box 2, which notates the entity as a school described in section 170(b)(1)(A)(ii), and simply move on without needing to complete any other portions of the Schedule. However, schools can opt to complete Schedule A, Part II in order to demonstrate that they are publicly supported, which then qualifies them to use the special rule on Schedule B. Schools do still need to check off box 2 on page 1 of Schedule A and complete Schedule E (a schedule specific to schools) as required.

Passing the Part II test on Schedule A is accomplished by demonstrating that the organization receives more than 33 1/3% of its support from contributions, grants, or membership fees. As part of the test, excess contributors are required to be tracked. An excess contributor is a contributor, other than a governmental unit or publicly supported organization, who has cumulatively over the last five years made donations greater than 2% of total cumulative support received by the organization for the same period. Beginning with the current year, the required schedule must include the name of each donor and the respective amounts contributed for the current and prior four years. This schedule should be prepared and maintained on the same basis of accounting method used by the organization for financial statement purposes. This schedule is not included as part of the Form 990 filing—it is maintained internally by the organization and is not open to public inspection.

Any excess contributions reduce total Public Support as calculated on the Part II test. Public Support is then compared to Total Support, which includes income items such as investment income and unrelated business income, among others. As long as the resulting public support percentage is greater than 33 1/3%, the organization passes the test and unlocks the Schedule B special rule.

In a very basic example, if a school has a total contribution income of $5,000,000 during the year and is able to pass the Schedule A, Part II test as prescribed above, their Schedule B donor threshold rises from every donor of $5,000 or more to just those donors whose total contributions totaled $100,000 (2% of $5,000,000) during the year. As you can see, this greatly reduces and limits the Schedule B reporting burden to potentially just a few sizeable donors.

If your organization would like to evaluate using the Schedule A Part II test to follow the special reporting rule for Schedule B, please reach out to our nonprofit tax services team. We are here and ready to help!

The Federal Deposit Insurance Corporation (FDIC) recently issued its first quarter 2024 Quarterly Banking Profile. The report provides financial information based on call reports filed by 4,568 FDIC-insured commercial banks and savings institutions. The report also contains a section specific to community bank performance. In the first quarter of 2024, this section included the financial information of 4,128 FDIC-insured community banks. BerryDunn’s key takeaways from the report are as follows:

The first quarter of 2024 resulted in community banks’ quarterly net income increasing $363.2 million from the previous quarter. 

Quarterly net income for community banks increased 6.1% in first quarter 2024, resulting in $6.3 billion of quarterly net income. Despite the increase in quarterly net income, full year net income declined. Compared to first quarter 2023, net income had decreased $1 billion or 13.9%. Half (49.9%) of all community banks reported a decline in net income compared to fourth quarter 2023. Net income for community banks was impacted by higher noninterest expense and lower net interest income.

Despite remaining consistent in the prior quarter-over-quarter comparison, NIM (net interest margin) resumes the declining trend into 2024.

Community banks’ NIM dropped in the first quarter to 3.23%. NIM was down 26 basis points from the year-ago quarter. The yield on earning assets increased 66 basis points, and the cost of funds increased 92 basis points. Despite the significant decline, the community banks’ NIM performance continued to prevail the overall banking industry’s NIM of 3.17%, which declined 10 basis points in first quarter 2024. The banking industry’s NIM dropped seven basis points below the pre-pandemic average NIM of 3.25% for the first time since third quarter 2022.

Loan and lease balances continued to grow in first quarter 2024, with 62.9% of community banks reporting quarterly loan growth. 

Loan and lease balances continued to see widespread growth in first quarter 2024. Community banks saw loan growth in all major portfolios except construction and development loans and agricultural production loans. Nonfarm, nonresidential commercial real estate (CRE) loans exhibited the most growth from fourth quarter at 1.4%, followed closely by residential real estate and C&I loans, both at 0.9%. Total loans and leases grew 7.1% from one year ago. This year-over-year growth was also driven by farm, residential real estate and nonfarm, nonresidential CRE loans, which showed growth year-over-year of 8.8%, 8.5%, and 6.7%, respectively.

More than half of all community banks (61.9%) reported an increase in deposit balances from the previous quarter. 

First quarter 2024 showed growth in interest-bearing deposits of $35.6 billion but a decline in noninterest-bearing deposits of $12.9 billion from the previous quarter. Total assets at community banks increased 0.8% quarter-over-quarter and 4.0% year-over-year. Community banks’ total deposits as a percentage of total assets have been declining since reaching 86.71% in first quarter 2022; however, community banks have yet to return to the low of 81.75% shown in first quarter 2020. The average total deposits as a percentage of total assets has shown year-over-year increases of 0.41%, 2.57%, and 0.95% from 2019 through 2022, respectively; however, the community banks have shown a year-over-year decrease in average total deposits as a percentage of total assets of 2.44% and 0.15% into 2023 and the first quarter of 2024, respectively.

BerryDunn and Stifel recently held the 11th annual New England Banking Summit on May 30th in Portsmouth, New Hampshire. The firms were joined by over 30 different organizations and touched on current economic trends, accounting standards and tax updates, strategies for maximizing benefits and minimizing risks within financial institutions, navigating change, and ways to optimize Current Expected Credit Losses (CECL) processes. Chief Economist Lindsey Piegza, Ph.D. from Stifel, spoke, amongst other things, about the May Federal Open Market Committee (FOMC) meeting. She noted she believes the FOMC will remain on the sidelines for longer than previously expected. The FOMC stated that “readings on inflation have come in above expectations.” This could continue to put downward pressure on NIMs more so than already seen in the above graph.

The inactivity by the FOMC has also wreaked havoc on some bank’s budgets, especially those that optimistically budgeted some rate cuts in 2024. But this projected inaction should not be reason to declare defeat. Bankers are great at pivoting, which was proven continuously during the pandemic. This is another opportunity for banks to pivot and change strategic direction. For instance, this may be a time to focus on other, non-interest revenue sources, or possibly revisit recurring operating costs for opportunities to streamline.

As always, BerryDunn’s Financial Services team will be right alongside you, navigating every rise, bump, and drop of this rollercoaster ride together.

Read this if you are preparing for a retirement plan audit.

Few things can feel as daunting as preparing for an audit, especially if it’s your first time being audited. With all the information circulating about new laws and regulations dictating who is required to undergo an audit, compliance issues can become even more complicated. Here are some considerations to help you as you prepare for a retirement plan audit.

While it might seem obvious, it’s worth noting that the purpose of an employee benefit plan is to generate and protect retirement income on behalf of your employees. Plan transactions should be processed in accordance with plan provisions so that employees receive the maximum retirement benefits they have earned. This is why laws and regulations exist and, in some cases, audits are required. 

Fiduciary responsibility

Those who hold authority over employee benefit plan operations and assets—such as plan administrators—have a fiduciary responsibility to oversee and protect the plan, acting in the best interests of the plan’s participants and their beneficiaries. Fiduciaries can be held personally liable if this responsibility is not upheld. Yet this is only one of the many complexities that comes along with maintaining an employee benefit plan. Additional complexities to consider include diversifying plan investments and selecting and monitoring service providers.

Even if your employee benefit plan does not meet the participant threshold that requires an annual audit, your plan is still subject to the same laws and regulations as plans requiring an audit. One of the most important things you can do as a fiduciary, or as someone involved in the operations of an employee benefit plan, is to stay current on changing laws and regulations. 

It is also important to understand your plan’s adoption agreement, including its nuances, which vary from plan to plan. These nuances can include, but are not limited to, navigating the intricacies of vesting provisions, participant loans, distribution types, and defining what constitutes plan-eligible compensation.

Independent auditors

Plan sponsors can also benefit from working with an independent auditor, even when it is not legally required. Many service providers offer consulting services, typically referred to as audit-readiness assessment services, at a lower cost than an audit and with similar benefits, including an understanding of any gaps in internal controls, a deeper understanding of accounting standards and compliance requirements, and an opportunity to improve documentation and processes to maintain operational compliance with plan documents and regulatory guidance. These services are vast and customizable and can help you maintain compliance with ERISA and IRS regulations, work efficiently with third-party administrators, and test operational workflows to identify processes that should be occurring throughout the plan year. 

As retirement plan auditors, a common challenge we see when conducting first-time plan audits is the amount of time it takes the employer to remit employee contributions to the plan and how quickly those funds are invested in the employee’s retirement account. Optimally, this transaction should align with the same date the employee funds are withheld during the payroll process. This is an area that would be examined by an auditor in an audit-readiness assessment and is one example of the many ways this type of service can support improvements to your plan operations and compliance.

Other things to be aware of include the timeline for processing electronic deferral election changes in the plan sponsor payroll software, calculation of participant vesting and identification of forfeited amounts, and making sure all calculations for contributions are based on the correct definition of plan compensation per your plan documents.

Audit-readiness assessments

Is your plan a candidate for an audit-readiness assessment? While not suitable for everyone, investing in an audit-readiness assessment service is certainly worth considering. This is especially true if your plan is growing, you are seeking to become better prepared should that audit come, or you are simply feeling overwhelmed. Whatever the case, if you would like to discuss your options, the BerryDunn Employee Benefit Plan Audit team is here to help. 

Read this if you sponsor an employee benefit plan. 

Sponsors of defined benefit and defined contribution retirement plans should keep the following deadlines and other important dates in mind as they work toward ensuring compliance for their plans in 2024. Dates assume a calendar year plan. Some deadlines may not apply, or dates may shift based on the plan sponsor’s fiscal year. 

JANUARY

• 15 / Fund: Possible fourth quarter 2023 contribution due for defined benefit pension plans.
• 31 / Action: File IRS Form 945, Annual Return of Withheld Federal Income Tax, by January 31 for non-payroll income taxes, such as taxes withheld by retirement plans, during 2023.
• 31 / Action: Distribute IRS Form 1099-R to participants by January 31 for 2023 retirement plan distributions.

Best Practice: Plan sponsor should confirm the accuracy of the prior year’s census data to the recordkeeper. This information is used for ADP/ACP testing, among other things.

FEBRUARY

• 28 / Action: File IRS Form 1096, Annual Summary and Transmittal of US Information Returns, with IRS if using paper transmittal by February 28 for 2023 tax year.
• 28 / Action: File IRS Form 1099-R in paper format with the IRS by February 28 for 2023 retirement plan distributions.

Best Practice: Review and approve compliance testing results sent by plan administrator.

MARCH

• 15 / Action: Highly compensated employees who fail the ADP/ACP test for the prior plan year must have refunds processed by March 15 (other than eligible automatic contribution arrangements).
• 15 / Fund: Partnerships and S Corporations that are not getting an extension must fund employer contributions to receive tax deductions for the prior year.

APRIL

• 1 / Action: 401(k) plans with publicly traded employer stock that follow Article 6A of the Regulation S-X (SEC format) must file Form 11-K with the Securities and Exchange Commission by April 1.

Note: The IRS “weekend rule” does not roll the April 1 deadline to the next business day if April 1 falls on the weekend or holiday.

• 1 / Action: Recordkeeper (or other responsible party) completes and files Form 1099-R electronically with the IRS by April 1 for 2023 retirement plan distributions.
• 1 / Action: April 1 deadline for 5% of business owners and terminated participants who turned 73 in 2023 to receive their required minimum distribution (RMD).
• 15 / Fund: April 15 possible first quarter 2024 contribution due for defined benefit pension plans (i.e., contribute by April 15 before the weekend, as contribution deadlines are not extended to the next business day).
• 15 / Distribute: Participants who contributed over 402(g) or 415 limits in the previous year must be refunded the excess amount by April 15.
• 15 / Action: File PBGC Form 4010, Notice of Underfunding for single-employer defined benefit plans with more than $15 million aggregate underfunding by Monday, April 15.
• 15 / Fund: C-Corporations and Sole Proprietors that are not getting an extension must fund employer contributions by April 15 to receive tax deductions for the prior year.
• 15 / Fund: IRA contributions for the prior tax year must be funded by April 15.
• 29 / Action: Send annual funding notice to participants of single and multi-employer defined benefit plans over 100 participants by April 29.

JUNE

• 28 / Action: 401(k) plans with publicly traded employer stock must file SEC Form 11-K with the Securities and Exchange Commission by June 28 or file an extension on SEC Form 12b-25.
• 30 / Action: Highly compensated employees who fail ADP/ACP test for prior plan year must have refunds processed by June 30, if an eligible automatic contribution arrangement (EACA).

JULY

• 15 / Action: 401(k) plans with publicly traded employer stock that requested a 15-calendar day extension (SEC Form 12b-25) for the SEC Form 11-K must file the SEC Form 11-K with the Securities and Exchange Commission by July 15.
• 15 / Fund: Possible second quarter 2024 contribution due for defined benefit pension plans by July 15.
• 31 / Action: File IRS Form 5500, Annual Return/Report of Employee Benefit Plan, and IRS Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits, for the 2023 plan year by July 31.
• 31 / Action: To request an extension of time to file IRS Form 5500, file IRS Form 5558 by July 31.

SEPTEMBER

• 15 / Fund: If an extension was filed, September 15 is the deadline to fund employer contributions for Partnerships and S Corporations.
• 15 / Fund: September 15 is the last date to make 2023 contributions for single and multiemployer defined benefit pension plans.
• 30 / Action: By September 30, distribute the  Summary Annual Report (SAR) to participants if the Form 5500 was filed on July 31.

OCTOBER

• 3 / Action: Distribute annual notices to participants no earlier than October 3 and no later than December 2, including notices for 401(k) Plan Safe Harbor Match, Automatic Contribution Arrangement Safe Harbor, Automatic Enrollment, and Qualified Default Investment Alternatives (QDIA).
• 15 / Fund: On October 15, any possible third quarter 2024 contribution due for defined benefit pension plans.
• 15 / Action: October 15 is the extended deadline for filing IRS Form 5500 and IRS Form 8955-SSA.
• 15 / Action: October 15 is the extended deadline for filing individual and C Corp tax returns.
• 15 / Action: If an extension was filed, October 15 is the deadline to fund defined contribution employer contributions for C Corporations and Sole Proprietors.
• 15 / Action: October 15 to open a Simplified Employee Pension (SEP) plan for extended tax filers.
• 15 / Action: Send annual funding notice to participants of single- and multi-employer defined benefit plans with 100 or fewer participants by October 15.
• 15 / Action: October 15 defined benefit plan PBGC Premium filings and payments due.
• 31 / Action: Single-employer defined benefit plans that are less than 60% funded or are 80% funded and have benefit restrictions triggered must inform participants by October 31 or 30 days after the benefit restriction applies.

Best practice: Make sure administrative procedures align with language in plan document.

DECEMBER

• 2 / Action: Distribute annual participant notices no later than December 2. These include notices for: 401(k) Plan Safe Harbor Match, Automatic Contribution Arrangement Safe Harbor, Automatic Enrollment and Qualified Default Investment Alternatives (QDIA).
• 15 / Action: December 15 is the extended deadline to distribute the Summary Annual Report (SAR) when the Form 5500 was filed on October 15.
• 31 / Action: December 31 is the final deadline to process corrective distributions for failed ADP/ACP testing; a 10% excise tax may apply.
• 31 / Action: Ongoing required minimum distributions (RMDs) for 5% business owners and terminated participants must be completed by December 31.
• 31 / Action: Amendments to change traditional 401(k) to safe harbor design, remove safe harbor feature or change certain discretionary modifications must be completed by December 31. Amendments to change to safe harbor non-elective design must be completed by December 1 of the given plan year for 3% or by December 31 of the following year for 4% contribution level.
• 31 / Action: Plan sponsors must amend plan documents by December 31 for any discretionary changes made during the year.

In addition to those important deadlines and dates, plan sponsors should be aware of the contribution plan limits and other rolling notices for 2024:

• Traditional and Roth Individual Retirement Account contribution limit is $7,000. Catch-up contributions for participants aged 50 and over is $1,000, which is fixed by law and not adjusted each year.
• The employee salary deferral limit for 401(k), 403(b) and 457 plans is $23,000. The catch-up contribution limit for participants who are age 50 or older in 2024 is $7,500.
• Maximum annual additions (i.e., employee deferrals, employer contributions, and forfeitures) that can be allocated to a participant’s defined contribution plan account for 2024 is $69,000.
• Limitation for the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is $275,000.
• The dollar amount used to define “highly compensated employee” under Section 414(q)(1)(B) is $155,000.

BEST PRACTICES:

• Contact your service provider to discuss any required and/or discretionary SECURE 2.0 provisions effective in 2024 to ensure compliance.
• Make sure discretionary amendments that impact plan design and administration are executed and implemented timely per IRS regulations.
• Make sure administrative procedures align with language in plan document.
• Plans may consider doing mid-year compliance testing to avoid failing applicable annual tests.
• Review and approve compliance testing results sent by plan administrator.
• Plan sponsor should confirm the accuracy of the prior year’s census data to the recordkeeper. This information is used for ADP/ACP testing, among other things.

If you want to discuss these considerations or have questions about your specific situation, please contact our Employee Benefits team. We're here to help.