Escape Bad Census Data for Retirement Plan SUCCESS

Imagine you have entered an escape room. The details buried in the items around the room – on the walls, sitting on tables, attached under chairs – all mock you as you plan your attack. A few of these items are decoys or mere distractions to rob you of precious time. Meanwhile, the clock ticks and the first puzzle awaits. Believe it or not, this scenario feels a lot like administering a plan with bad census data to a plan administrator.

The Puzzle: Plan Administration Style

When the plan year ends, the plan administrator is in a race against the clock to unfold the details involving the company, the plan, and the employees of the plan they’re working on. The administrator must determine how these details interact, what additional tasks need completion, and how to properly report everything based on changes that might have taken place through legislation or guidance, plan amendments, additions and subtractions in personnel, or with the plan sponsor at large. Similar to the typical escape room protocol, new discoveries or puzzles do not reveal themselves until the player or plan administrator has solved the preceding puzzles. Remember those decoys? Plan census data often presents a variety of pitfalls when the information provided has not always been complete and accurate.

The Pesky Decoys: Bad Census Data

Let’s look at two instances where those pesky “decoys” cause unneccessary delays.

  • In 2022, Freddy appeared on the census information for the first time with a hire date in 2020. The administrator cannot take this at face value. They must inquire further and then build Freddy’s history, so we know how Freddy relates to the plan.
  • A law firm provided complete information about Marianne on the census request. Then, after the administrator calculated the employer contribution, the firm told us she was only “of counsel,” and not a common law employee of the firm.

In both cases the administrator lacked the necessary information to either move forward with the required testing, calculations, and reporting or needed to redo the work due to incomplete information.

The Key to Success: Escaping Bad Data

To ensure success for the plan sponsor, plan, and participants, we require timely, complete, and accurate census information.

What does this mean? Here are some important tips plan sponsors should take to ensure their data is accurate and their plan stays in compliance:

  • Notify service providers when changes happen, including new hires and rehires, terminations, separations, retirements, and leaves of absence.
  • Provide information on ALL employees employed at any time, no matter how short, during the plan year.
  • Provide all pertinent information, including:
    • social security number or other unique identifier,
    • legal name,
    • dates of birth, hire, and separation,
    • compensation or wages,
    • deductions and deferrals from pay,
    • employer contributions made during the year,
    • hours worked,
    • job category,
    • employment status and type,
    • marital status,
    • company ownership,
    • familial connection to company owner,
    • owners ownership in other entities,
    • changes in company status (ownership, tax status, etc.)

The sooner employers provide the pertinent information, the better your service providers can serve the needs of the plan and participants.

Interested in more information or have questions on census data? Fill out the form below and we’ll reach out!

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