Compliance Request FAQ
- General
- Census and Payroll Summary
- Non-Discrimination Testing vs. Audit Testing
- Annual Questionnaire and Fee Schedules
For more answers with examples, download a copy of our example help file for help with Censuses, Annual Questionnaires, or Payroll Reports.
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Why do I have to provide the census information?
TAG uses the census information to complete compliance testing and the Form 5500 required by the IRS each plan year.
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What info should my census include?
Your annual census must include the following information for every individual who received W-2 wages in during the plan year (regardless of whether the employee contributes/participates in the plan). Earned income can be included for owners in a Limited Liability Corporation (LLC).
- First and last name
- Social Security number
- Indicative data (email address and postal address)
- Date of birth
- Original hire date
- Date of rehire (if applicable)
- Excludable class (if applicable)
- Termination date(s) (if applicable) and rehire date (if applicable)
- Total hours worked
- Gross wages (that correspond to Box 5 on Form W-2)
- Excludable wages (if applicable)
- Any applicable contributions (including pre-tax and Roth deferrals, employer match, safe harbor match, profit share contributions, prevailing wage contributions, etc.)
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Which employees should I include on the census?
The census should include:
- Part-time employees
- Employees terminated during the plan year
- Non-participating employees
- Participating employees
- Owners receiving active income
- Union employees (employees covered under a collective bargaining agreement)
- Leased employees (employees that receive a 1099-Misc rather than a W-2)
- Non-resident aliens
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Why do I have to report the leased employees?
Your plan document may or may not allow leased employees to participate in the retirement plan. Even if your plan document excludes participation from leased employees, these employees are included in overall coverage testing. If a significant number of leased employees work substantially full time for a year, they may need to be included in your plan.
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Why do I need to report hours worked for the participants?
Hours worked during the year are needed to determine eligibility, vesting, and employer contribution requirements.
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What wages should be provided for the census and payroll report?
- All gross wages must be reported (from every location if the employee works at more than one location)
- If your plan is a startup during the year of testing and your plan’s effective date is January 1, a payroll report for the full calendar year of compensation must be provided.
- If your plan is a startup during the year of testing with an effective date after January 1, a payroll report for the full calendar year of compensation and a payroll report from the effective date through the end of the plan year must also be provided.
- For a takeover plan, a payroll report for the full calendar year of compensation must be provided.
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What is compensation from date of eligibility?
It is the compensation starting from the date the employee becomes eligible to enter the plan until the last day of the plan year.
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What is excludable compensation?
Based on plan documents, certain types of compensation can be excluded from testing. This can include, but is not limited to:
- Pre-entry compensation (pay earned before the participant becomes eligible in the plan)
- Certain fringe benefits including reimbursement, moving expenses, deferred compensation, and welfare benefits
- Pay earned as a bonus or commission
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What documents are needed to verify the census?
If your plan is an audit plan or transferred to TAG during the plan year:
The items below that are applicable to your plan should be uploaded to the Payroll Report PDF box on the Year End Compliance Data Reconciliation Process page (PDF file format required):- A year-to-date payroll summary report generated from your payroll provider or payroll software (PDF file format required) that meets the requirements listed in the “Payroll Report Requirements” section.
- If a payroll report is not available, the Department of Labor will alternatively accept prepared and filed IRS Form W-2(s) and the accompanying IRS Form W-3.
- For Limited Liability Corporations taxed as partnerships or an LLC, earned income for any active owner is required before any nondiscrimination testing can be completed.
- For takeover plans, a trust or “valuation” report from your prior plan administrator is required. (For more information regarding this, please see the section on trust report requirements.)
If your plan is a non-audit plan and did not transfer to TAG during the plan year:
The item below is applicable to your plan:- For Limited Liability Corporations taxed as partnerships or an LLC, earned income for any active owner is required before any nondiscrimination testing can be completed.
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Why does an audit plan or plan that transferred to TAG during the plan year have to provide both a census and payroll summary?
These reports are used to ensure accuracy and act as a system of checks and balances. The payroll report is used to reconcile the census, and as a result, the documents verify the other. While the census is something that can be manipulated, the payroll summary is not, which provides an added level of assurance.
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What is the difference between a census and a payroll summary?
The payroll summary should be a PDF document, automatically generated by your payroll system or payroll vendor. This is typically titled a payroll summary, wage report, or W-2 summary. The report must be in a pdf file format for authenticity purposes as other file formats may be easily altered. Apart from being an automatically generated report, the census and payroll file will also differ regarding the information being provided. The census will focus solely on year-to-date 401(k) activity and overall wage and hours data, whereas, the payroll summary will contain more in-depth wage information such as taxes withheld, all employee deferrals, and other information commonly found on the W-2 form.
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What information must a payroll summary report contain?
Your payroll summary report must include all the following information in a PDF file:
- First and last name
- Gross wages earned (Box 5, Form W-2)
- All taxes withheld
- All payroll deductions (including retirement plan deferrals, healthcare plan deductions, etc.)
- Total of annual hours worked (including overtime) for hourly employees. For salaried employees, the DOL allows the acceptable salary standard of 2080 hours
- The company totals page
- A key that defines all abbreviations and codes used on the report
This information is needed to verify the amount of contributions taken out of employee paychecks and matches what has been uploaded to the recordkeeper. The DOL and IRS also require TAG to use this information as verification of compensation, hours worked, and employer contributions required for nondiscrimination testing.
If Form W-2s and a Form W-3 Report(s) are used, the wages reported on the census should reconcile to the amounts reported in Box 5 of the W-2s.
*If you have changed payroll providers during the year, you must provide payroll files from both payroll providers. Please make sure the payroll reports provide a date range for the report. -
What if I have individuals who work for multiple locations and they are counted as employees at each location?
For individuals that work at multiple locations, put them on the census once with all their information. When the census is uploaded to the Portal, the Portal will only read their Social Security Number the first time it appears.
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What is required for a trust report?
If your plan is considered a takeover plan, you are required to submit a trust report. Please reach out to your prior recordkeeper and request a trust or “valuation” report from the beginning of your plan year through the transfer or wire date. This report should contain:
- A beginning balance as of first day of the plan year.
- All the following changes made throughout the date of the transfer broken down by source:
- Contributions
- Forfeitures
- Earnings (gains/losses)
- Expenses and fees
- Loan repayments
- Transfers
- Withdrawals
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Where can I obtain my year-end payroll summary?
This report can typically be requested through your payroll vendor. It is typically titled a payroll summary, wage report, master control, payroll register, or W-2 summary. If your payroll is done entirely in house, these reports can be automatically generated by your payroll system.