The Year-End Plan Census

Lease Standard

Written by Erica Knerzer

November 25, 2019

When you’ve reached the end of the Plan year, among other administrative tasks, it is time to compile the census. Assuming the Plan has been operating according to the Plan document throughout the year, the next step is to organize your information. Whether the Plan Sponsor prepares the census or a third party administrator organizes it on the sponsor’s behalf, it is important to review and verify that the census is complete and accurate. The following paragraphs will describe why the census is important, common problems we observe as auditors, and steps the plan sponsor can perform to take responsibility for it.

Why is it important?

Data contained in the census is used for annual compliance testing required by both the IRS and Department of Labor. This analysis is essential to make sure the Plan remains qualified. The testing will identify any corrective actions needed in order for the Plan to comply with the provisions affecting it. Errors in the census could result in testing inaccuracies and lead to additional testing and corrective action. Issues that go uncovered could affect the Plan’s tax-exempt status. The census is also used by the Plan’s auditor. A smooth audit process starts with a strong census.

What are common deficiencies to look for?

The information contained in the year-end census should cover the entire plan year, not just as of a point of time during the year. It should also include all employees with wages paid during the Plan year. This means that even if an employee is not employed at the end of the year, not yet eligible for participation, or not making deferrals, they should still be on the census if they received compensation. Although the format of the census and categories of data requested varies by Plan, ensure the census is complete and includes all of the required information.

How to ensure accuracy?

One way to identify potential issues in the census is to reconcile the compensation reported on the census to internal year-end payroll records or the W-3. This is a good check to determine if there are people missing. Keep in mind that only payrolls with pay dates that fall within your Plan year should be included. For example, for a December Plan year end, you would not include the payroll on the census that is paid in January even though the dates worked were in December. It is also recommended that the employee and employer deferral amounts be reconciled to contribution records. Demographic data such as birth dates, hire dates, and termination dates should also be reviewed for accuracy by comparing the information to employee files.

Please contact a member of the Hawkins Ash CPAs employee benefit plan team if you have any questions or need assistance regarding this topic.

Author: Emily Baldwin, CPA

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Erica Knerzer
I joined Hawkins Ash CPAs 20 years ago. As a senior manager in the firm’s La Crosse, WI, office, I focus on audit. I am a member of the firm’s Audit and Accounting Committee. I also co-chair the firm's Employee Benefit Plan Services group.

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