Well, December is here and ’tis the season…for end of year benefits and tax compliance! (You thought I was going to say winter holidays, right? Gotcha!) This is a time to be grateful for your benefits and payroll team. Don’t be alarmed at first glance: it’s unlikely that all of these items apply to you, and we’ve linked to additional instructions and explainers throughout. You’ve got this.
*Christmas is a bank holiday, so the Federal Reserve banks and branches will be closed. They will be open on Friday, Dec. 24. See The Federal Reserve website for all banking holidays that impact payroll and how to make timely payroll deposits.
We hope you have some PTO planned after all this December compliance stuff. You deserve it!
Benefits
December 1, 2021 is the deadline for:
- Sending annual 401(k) and 401(m) safe harbor notices for applicable plans
- Sending annual Qualified Default Investment Alternative (QDIA) notices
- Sending annual automatic contribution arrangement notices
- Amending a 401(k) plan for conversion to a safe harbor nonelective design for the existing plan year
December 15, 2021:
This is the open enrollment end date for individuals who want to sign up for 2022 healthcare through the Marketplace Note that some states may have extended deadlines. The plan(s) selected will start Jan. 1, 2022.
December 31, 2021:
1. If your company’s benefits changed at any point during 2021 due to the Families First Coronavirus Response Act (FFCRA), the SECURE Act, and/or the CARES Act, you must amend your ERISA plan documentation no later than Dec. 31. Examples of changes due to COVID-19 may include:
- Updating Flexible Spending Account (FSA) qualified health expenses (such as allowing reimbursement for masks or other personal protective equipment)
- Increased FSA carryover limits (temporary)
- Updates to group health plans to address COVID-19 testing and telehealth appointments—if this was included in your plan documentation. For small group, fully-insured plans, the carriers likely updated the documentation in regards to covered expenses.
- Extended deadlines for 401(k) hardship withdrawals
2. Required Minimum Distributions (RMD) are due under IRC Section 401(a)(9)
3. This also the final deadline for the following:
- Issuing corrective distributions for Actual Deferral Percentage (ADP)/ Actual Contribution Percentage (ACP) test failure(s) that occurred in the previous year
- Correcting a prior year ADP/ACP test failure with qualified nonelective contributions (QNEC)
- Amending a 401(k) plan to remove safe harbor status for the next plan year
- Non-discrimination testing for Section 125 and Section 105 plans (like HRAs) must be completed (and corrected, where applicable). This includes premium-only plans (which allow pre-tax contributions to benefits), even if your company does not offer other Section 125 plans like FSAs.
4. Be sure that you have the up-to-date federal, state, and local labor law posters properly displayed for your employees. These posters are mandatory and they cover important labor laws and worker rights related to a range of matters in the workplace, including: minimum wage, discrimination, and workplace safety. You may be required to have 2022 posters displayed on Jan. 1, 2022, so you’ll want to be ready before the end of the year. You can request free federal posters from the Department of Labor.
Payroll
Semi-weekly depositors
If you are a semi-weekly depositor, it’s imperative that you stick to the schedule. Not sure if this applies to you? The TL;DR for IRS Notice 931: Deposit Requirements for Employment Taxes is that you’re required to deposit employment taxes on a semi-weekly basis (making you a semi-weekly depositor) if you report more than $50,000 in taxes during the lookback period. Not sure what the lookback period is? We’ve got you covered. There’s a different lookback period for all kinds of compliance stuff. It can be a lot to keep track of (which is why we love accountants). The lookback period for federal employment taxes refers to the 12 month period that ends on June 30 of the previous year. You do the math. (Just kidding!) Without further ado, the lookback period for 2022 is July 1, 2020 – June 30, 2021.
Note: For state and locals that have employment taxes, they use their own lookback periods, deposit frequencies and due dates. Reach out to your state and/or local tax agency to confirm the deadlines for payroll taxes owed to them.
Here’s a cheat sheet to help you remember the federal semi-weekly payroll schedule:
Monthly depositors
If you’re a monthly depositor, it’s also imperative that you pay on time.You’re likely a monthly depositor if you reported less than $50,000 in the lookback period (July 1, 2020 – June 30, 2021). You must deposit taxes on payments made in a month by the 15th day of the following month. For example, employment taxes for November payments are due no later than Dec. 15.
For new employers, since your tax liability in the lookback period before the date you started or acquired your business is zero, you’re considered a monthly schedule depositor for the first calendar year that you are in business.
Important: If you accumulate tax liability of $100,000 or more during your assigned semi-weekly or monthly deposit period, you must deposit the tax by the close of the next business day. Learn more.
