Retirement Plan Checklists: What Every Client Should Review Before the New Year

As the year draws to a close, it’s essential for individuals and businesses to review their retirement plan services to ensure compliance, maximize benefits, and set the stage for a secure financial future. This checklist from Target Retirement Solutions outlines the most important steps every client should take before the new year.

A proactive review of your retirement plan services helps you:

• Stay compliant with new regulations
• Maximize tax advantages
• Ensure plan participants are on track for retirement goals
• Identify and address any administrative gaps

1. Review Plan Amendments and Regulatory Updates

• SECURE 2.0 Act Changes: Ensure your plan reflects any discretionary changes made during the year. While mandatory amendments are not due until December 31, 2026, discretionary changes should be documented by the end of 2025 to align with operational practices.
• Mandatory Roth Catch-Up Contributions: Starting January 1, 2026, employees earning over $145,000 must make catch-up contributions on a Roth basis. Prepare to communicate these changes to affected participants well in advance.
• Long-Term, Part-Time Employee Eligibility: From January 1, 2025, employees with at least 500 hours of service in two consecutive years must be eligible for elective deferrals. Update your tracking and eligibility processes accordingly.

2. Update Participant Information

• Enroll New Employees: Ensure all eligible employees are enrolled in your retirement plan services for the new plan year.
• Terminate Departed Employees: Remove employees who have left your organization and update termination dates as needed.
• Adjust Compensation and Contributions: Review and update compensation records for all participants, even if there are no changes, to ensure accuracy for the new plan year.

3. Maximize Contributions and Review Limits

• Know the IRS Limits: Confirm that employee and employer contributions do not exceed IRS annual limits. Encourage participants to increase contributions, even by 1%, to boost retirement readiness.
• IRA Contributions: Remember, IRA contributions for 2025 can be made until April 15, 2026, but making them before year-end provides a psychological and financial advantage.

4. Take Required Minimum Distributions (RMDs)

• RMD Deadline: If you are age 73 or older, ensure RMDs are taken from traditional IRAs and workplace plans by December 31 to avoid penalties.
• Calculation: RMDs are based on your account balance as of December 31 of the previous year and your IRS life expectancy factor.

5. Review Beneficiary Designations

• Update for Life Changes: Marriage, divorce, births, or deaths should prompt a review of all beneficiary designations. These override your will, so accuracy is critical.
• Verify Across All Accounts: Check every retirement account and insurance policy to ensure beneficiaries are current.

6. Evaluate Investment Options and Fees

• Review Investment Selections: Assess your plan’s investment lineup and document any changes or decisions for compliance and fiduciary purposes.
• Analyze Fees: Compare plan fees to industry benchmarks and document your review process.

7. Enhance Cybersecurity and Fiduciary Practices

• Update Cybersecurity Policies: Implement safeguards to protect sensitive data in all ERISA-covered plans.
• Fiduciary Training: Participate in updated fiduciary training to stay aligned with best practices and regulatory expectations.

8. Schedule and Align Plan Payments

• Set Payment Schedules: Create new payment schedules for employer and employee contributions for the new plan year, aligning with your payroll cycle.
• Timely Deposits: Ensure all contributions are deposited as soon as possible after payroll deductions to comply with Department of Labor requirements.

A thorough year-end review of your retirement plan services ensures compliance, maximizes benefits, and positions you and your employees for a successful new year. For tailored guidance and support, contact Target Retirement Solutions—your partner in retirement plan services.

This checklist is for informational purposes only and should not be considered legal or tax advice. Consult with your plan advisor or Target Retirement Solutions for personalized recommendations.