What is a ‘true up’?

If your plan has a non-elective safe harbor contribution, this means that all eligible employees are due to receive a contribution equal to a certain percentage of their annual compensation (as defined in your plan’s Adoption Agreement).

If you deposit the safe harbor contributions each payroll period, you may be surprised to learn that additional mandatory contributions sometimes need to be added to make your plan whole; these contributions are called ‘true-ups.’ 

True-ups can occur for the following reasons:

• Employees who become eligible mid-year would not have received any contributions prior to becoming eligible.
• Gross up earnings on W2 at year-end that aren’t captured during ongoing payrolls.
• General errors in depositing the contributions throughout the year.

What can I expect?

After we complete the Compliance Package, a true-up report will be uploaded to the sponsor portal for your review. Once you have reviewed the report and confirmed all information is accurate, you may select to approve the contribution and our team will proceed with making the adjustments on the report provided. We will Initiate an ACH debit from your company bank account for the total underfunded amount
and/or forfeit overfunded money into the plan suspense account. This action cannot be easily reversed. Once the ACH is initiated, changes will require manual correction which may result in additional fees.