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Census Data Collection for Qualified Plans

Every year around this time, Third Party Administrators collect census data from their clients. The plan sponsor prepares the census for the TPA which includes data such as; employee name, date of birth, social security number, date of hire, date of termination, date of rehire, annual compensation, deferrals, etc. This information is given to the TPA to begin reconciling the data. Prior to running testing or working up allocations, TriStar ties out this data, ensuring there are no discrepancies within the numbers. TriStar compares the census totals with the W-3. If the numbers do not match, our administrators dig deeper to find and correct the error. In some cases, additional data may be requested from the plan sponsor and a ‘mini audit’ is performed. This reconciliation process is what differentiates TriStar from other TPA’s, especially those which offer bundled services.

Once the accurate census data is collected, TPAs run various tests to ensure the plan is compliant with the IRS and DOL’s standards. If the plan fails testing, corrective distributions and/or contributions may be required in order to maintain the qualified status of the plan. The purpose of testing is to ensure the retirement plan is non-discriminatory and does not favor highly compensated employees. Some of this testing is bypassed for Safe Harbor 401(k) plans, which is why this type of plan is desirable for some plan sponsors.

In addition to the census, TriStar also requires that the plan sponsor submit a new questionnaire form each year. This questionnaire helps TriStar recognize and update information like; contacts, owners, trustees, etc. If a plan sponsor purchases or sells a business, it can greatly impact the 401(k) plan even if the companies are unrelated. We also verify the company has a bond which insures the assets of the plan. If the plan sponsor has not made any changes since the previous year, TriStar still requires an updated questionnaire form.

Census collection is a very crucial component of maintaining a qualified retirement plan. Any issues that go undiscovered can greatly affect the plan and its compliant status. This is why the information is collected every year in order to accurately preform required testing and to prepare and file Form 5500. It is important that the plan sponsor submits this data timely and accurately so that TPA’s can begin their work and prepare the company’s Form 5500 prior to the regulatory deadline.


Download PDF Census FAQ

Watch the Video How to Electronically Complete Census Data

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