And … that’s a wrap! Our employee benefit plan audit team here at Rea & Associates has just completed another season of employee benefit plan audits. Every year, we find new challenges that make it – let’s say, interesting. Typically, these challenges include items such as making certain plans’ financial statements adhere to new regulatory guidelines or perhaps sharing best practices with plan sponsors in an effort to improve processes.
While we still faced those items this year, we also encountered a challenge in an area where we traditionally would not expect issues to occur – with census data. Census data consists of the employee population and some basic data relating to those employees, such as date of birth, date of hire and compensation. Providing that data should be fairly simple, right? Well, sometimes it isn’t as easy as it may sound.
Providing Or Verifying 2017 Census Data
Even though the plan audit season is just wrapping up, it will soon be time for plan sponsors to provide or verify their 2017 census data. Therefore, now is the perfect time to make certain all data is in order for the next upcoming reporting period.
Accurate census data is important to plan auditors because it helps to determine completeness of your employee population from which samples are selected for additional testing. This data is also important to third party administrators (TPAs) because it’s the basis for performing annual compliance testing and ensuring that plan contributions are correct.
What Your Census Data Should Include
Whether you have a small plan with 5 employees or a large plan with 15,000 employees, proper census data collection is critical. Here are some basics guidelines for what your census data should include:
- Census data should include employee information sufficient to identify each employee (name, employee identification number). Use caution with using sensitive identifying information.
- Census data should include data relating to plan eligibility requirements. Examples would include date of birth if there is an age eligibility requirement. Service requirement for eligibility would include date of hire (be wary of rehire dates) and potentially the number of hours worked, if defined within your plan.
- Compensation is another key piece of data. This is one area where issues can occur because the plan’s definition of compensation may be different than simply gross wages. For example, plan compensation may exclude certain items such as bonuses or compensation earned while not eligible to participate in the plan.
- Contributions into the plan (both employee and employer) are another key data component that needs to be included in the census data listing. This assists both plan auditors and TPAs in ensuring that all contributions have been properly remitted to the plan (and on a timely basis).
Your Fiduciary Responsibilities Related To Census Data
Following are some best practices for meeting your fiduciary responsibilities and ensuring work by third party providers goes smoothly and doesn’t require an unreasonable amount of your time and money.
- Complete the census data listing with all key data components. Because the census data is used for plan purposes, there is a misconception by plan sponsors that the listing needs to only include employees who are actually contributing to the plan. Let me state this as clearly as I possibly can: Include ALL employees on your census data listing.
- Reconcile the census data listing to other reports, such as:
- The number of employees on the census to the number of W-2s issued
- The compensation per the census to W-3 wages, quarterly Form 941s and year-end payroll reports
- Contributions (employee deferral and employer contribution, if possible) per the census to year-end payroll reports
- Contributions (employee deferral and employer contribution) per the census to the annual trust/recordkeeping reports
It’s also a best practice to maintain the documentation that supports the data that is included in your census data listings.
Why This Matters
Following these best practices will ensure your census data listing is complete. It will also assist your outside service providers in completing their work in respect to your plan in a timely and efficient manner.
By Darlene Finzer, CPA, QKA, CSA,New Philadelphia office