End-of-plan-year adjustments generally consist of employer contributions made after year end for contributions that may normally be made each pay period.
At Guideline, several types of adjustments may be made after year end:
Owners who receive self-employment income (SEI) will not have compensation information until they prepare taxes for the business that sponsors the plan. If the plan has a nonelective contribution or match (which is processed each payroll for W-2 employees), the SEI owner will need to receive an adjustment for these employer contributions after the end of the plan year.
Plans that add a Safe Harbor non-elective contribution (SHNEC) mid-year or converted from a prior provider where the SHNEC was not collected per pay period will require an adjustment at the end of the year to ensure all eligible participants receive the correct SHNEC.
Plans with a matching contribution may require a “true up” under the terms of the plan document. Although Guideline does not offer true ups as an optional plan feature, some plans may have a true up in place from a prior provider that Guideline needs to maintain for the first year. These most commonly refer to plans with a matching contribution that elect to “true up” participants so they receive the maximum match at the end of the year.
Guideline may also use an end-of-year adjustment for a variety of situations where participants did not receive enough employer contributions throughout the year.
If your plan requires an end-of-year adjustment, Guideline will begin processing these as soon as possible after the close of the plan year. In some cases, Guideline will need additional information from you before the adjustments can be calculated for your sponsored plan (such as with SEI owner compensation information).