The census is prepared by the plan sponsor on an annual basis and includes the social security number, name, date of birth, date of hire, number of hours worked during the year, date of termination (if applicable), yearly compensation (which needs to meet the definition of compensation in the plan document), employee contribution for the year and the company’s contribution for the year for each employee in the company. The census needs to include the employees that are eligible to participate in the company’s plan and those that are not eligible to participate.
The plan sponsor provides the census to the TPA who then uses the data to perform the required annual testing to make sure that the plan is in compliance with the Internal Revenue Code and the Department of Labor standards. If the plan does not pass the tests performed by the TPA then the company will need to take corrective action in order for the plan to maintain its qualified status.
There are several steps that the plan sponsor can take to ensure accuracy of the census before the census is provided to the TPA. The first step is to reconcile total yearly compensation and employee contribution per the census to annual payroll data to make sure that you have a complete listing of employees. Also, it is important to review each employee’s information to make sure that you are not missing data that every employee should have (such as date of birth or date of hire). Another suggestion is to perform random testing of employees listed on the census to make sure that the data included in the census correctly matches up with the various forms included in the employee’s personnel files.
Kim Lubbers, CPA