Year-End Process Overview & Timeline – Vestwell Help Center

As year-end approaches, it brings presents and parties for many, but for sponsors of qualified retirement plans, it also brings compliance testing and Form 5500 preparation. Vestwell will take care of these items on your behalf, but there are a number of things we’ll need from you in order to do so. By understanding what goes on behind the scenes and what your action items are, you will feel prepared and ready for the year-end process!

Why we're doing this

As a service to you, Vestwell completes the required compliance testing along with your Form 5500.

Year-end testing refers to a series of mathematical tests that show that your company-sponsored retirement plan complies with the tax code and provides benefits in a non-discriminatory manner. The Form 5500 is an informational retirement plan tax form required to be filed with the IRS annually. To complete these items, we need to gather payroll, employee, and company information from you. This allows us to validate plan information, complete testing, and populate your Form 5500. You will provide this information to us by completing a ‘Year-End Testing Checklist.’

NOTE: Plans with a safe harbor provision in effect for the tested year are generally deemed to pass most tests. However, this does not mean that you are exempt from completing the checklist, and you may still be required to pass Coverage Testing and Deferral Limit Tests and properly identify all HCEs and their relatives in the plan.

How you can prepare

In order to make the Annual Testing process go smoothly, there are a few things that you as a sponsor can do to prepare:

• Review payrolls – log in to your sponsor portal, check the Contributions tab, and submit outstanding payrolls that may have been missed.
• Review deferrals – log in to your sponsor portal and compare the reports from your Reports tab to the deferral reports from your payroll system to ensure the deferral records match and to flag any excess deferrals.
• Consult your tax advisor/financial advisor about additional contributions – determine whether it’s advantageous for your business to make additional contributions...and further reward your employees!

What you can expect next

Shortly after the plan year ends, Vestwell releases the 3-part Annual Testing Checklist on the sponsor portal, which consists of:

• The Compliance Questionnaire
• The Annual Census
• The Principal Employee questionnaire

Please note - If we do not receive the three above items by March 1st, you will incur a $250 late fee charge.

After completing the above checklist - Vestwell reviews your information and communicates any discrepancies or missing information back to you. Your next action items will be:

• Review the email from Vestwell that explains any remaining information needed.
• Visit the Annual Testing Checklist in your portal and review the documents in the review section for any discrepancies.
• For missing information, upload the relevant documents to the upload section or resubmit information as instructed.
• Non-Safe Harbor plans only– Vestwell will complete the required Average Deferral Percentage (ADP), Average Contribution Percentage (ACP), and Top Heavy and Coverage test and post the results within the portal.
• Review the results posted on the Annual Testing Checklist – if the tests fail, press the ‘Remediate’ button to view your correction options.
• Most of the time, you will be able to choose between distributing refunds to affected employees or making additional contributions.

After completing the above - Vestwell will provide you with contribution reports if you have additional contributions.

• The testing process and contribution reports take the team around 4 weeks to complete once the year-end checklist is submitted.
• For discretionary contributions (match & profit sharing), review the contribution report and proceed with the deposit instructions if you wish.
• For mandatory contributions (Safe Harbor true-up contributions), review the contribution reports and proceed with the deposit instructions.

Later in the year - Vestwell will file Form 5500 on your behalf and upload a copy to your portal.

• Vestwell will automatically file a 5500 extension for your plan to ensure the 5500 is filed timely.
• We use the information provided to us from the Year-End Questionnaire to complete Form 5500 - Please make sure it is filled in accurately!
• If your plan had over 100 participants with an account balance as of January 1st, you will be required to obtain an IQPA audit and have additional action items - see here for more information.
• Log in to your sponsor portal and review your Form 5500 and Summary Annual Report.
• You can find more information about Form 5500 in our article: "What Is the Form 5500?"

The year-end process typically begins in January and ends in the fall. If you have any questions about the process, you can reach us any time at clientsuccess@vestwell.com.

Failure to provide or complete the above information will prompt Vestwell to complete testing and tax filing preparation using accumulated payroll records, which may result in inaccurate compliance results, filings, or late fees. We strongly encourage all year-end information to be submitted in a timely and accurate manner.