What other financial information needs to be included on the Year-End census file?
Your census files must include all compensation and contributions for your employees. All annual compliance testing must be based on actual numbers, not estimates, so you must provide us with the actual amount that each employee was paid and contributions made on their behalf for the year. We cannot accept estimates, annual salary rates, or an hourly rate multiplied by a standard number of full-time hours.
Which pay dates do I include? The first paycheck of this year covers hours worked in the previous year.
All employee compensation and deferrals should be reported on the census files on a cash basis and reflect what is reported on each employee’s W-2 for the year. For example, if your company’s first paycheck for 2022 includes services performed in 2021, all of the compensation was paid in 2022 and, therefore, must be reported on your 2022 census file. The same is true for all employee deferrals and employer match associated with that first paycheck.
At least some of my employees receive base pay, overtime, and/or bonuses. How do I report this on the census files?
The answer depends on how your plan defines “compensation.” This will be explained in your Plan Adoption Agreement that will be provided to you during onboarding. Your plan document will spell out whether only gross compensation should be considered or whether certain forms of compensation, like fringe benefits or bonuses, are excluded. Some plans may also disregard any compensation paid before the employee first becomes eligible to participate in the plan.
If your plan excludes those items from the definition of ”compensation” in your plan, your files must break out the included and excluded compensation elements and report them separately for each employee. We need that level of detail because we rely on the compensation data you provide to us to calculate benefits, perform annual compliance tests, and apply contribution limits.
I’m an owner of the company, and some of my compensation is based on profitability. How should my compensation be reported to Vestwell?
For employees of a corporation or an entity taxed as a corporation (eg: a LLC or S Corporation), the compensation shown on the employees’ W2 is what matters for plan purposes. For other types of entities, such as a sole proprietorship or partnership, where owners do not report their compensation on W2, your accountant must determine the company’s final profits and each owner’s share and that is the compensation we use for plan purposes. For more information about compensation for owner-employees, please see our Help Center article about “Reporting K-1 Earnings.”
Our plan offers an employer match. How do I report those in our census files?
If you have made company contributions to the plan during the year, such as an employer match, safe harbor contributions, or profit-sharing, they must be included in the census files. Your plan document may require these to be calculated separately for each pay period, month, or quarter or based on the full year’s worth of compensation and deferrals. As part of our annual compliance testing for your plan, we prepare an annual calculation and compare it to what you report on the year-end census files to identify discrepancies that need to be reviewed.
As you can see, no detail is too small for inclusion in your census files. If for some reason, you cannot get precise dates for some data elements or other information that we need, you must let your Vestwell representative know. Please contact us at annualtesting@vestwell.com