Getting started with data collection

So, we need to make sure your information is accurate. Getting organized now will help make sure deadlines are met.

You’ll receive a ‘Submit Compliance Testing Data Collection Task’ on the principal.com employer website approximately two business days after your plan anniversary date. Once the task is submitted and we have your information, we’ll complete the tests. 

If you want us to complete all tests by the deadline, you’ll have about one month from receiving the task to provide us the information. If any corrections are needed, the IRS deadline is 2 ½ months after your plan year end.

Tips for data collection

Based on our experience, we’ve put together a few tips to help you prepare for your data collection.

• Set aside time on your calendar for data collection
• Verify your participant data
• Confirm certain employees’ status
• Think about your plan’s definition of pay

You can begin preparing for the data collection process by ensuring your payroll and your employee census report match. Allowing time to review, compare, and update your data now is key.

What you can do now:

Run a report of your participants (census) from the plan sponsor website by going to Reports/Employees/Participant Data Report. In the work history section, select all of the data points: status, key status, HCE, hire date, term date, etc. Compare this report with the employee details you have on file.

What to look for

• If we’re missing someone, are they eligible? If yes, build employee records before your plan anniversary year end date (so our data matches yours).
• Be sure to include employees who chose not to participate, effectively deferring 0%.
• Check that all terminations and retirements are reflected with the date they occurred. In fact, it’s a good idea to check your termed employees prior to the beginning of each year.
• Confirm your employees’ status. Are they highly compensated (HCEs), owners, or key employees? You can update their status in Participant/Manage Participants.

Prepare for questions you’ll need to answer in the data collection task with the help of the census tool (PDF). Fill out the worksheet in advance of starting the data collection task so you’re ready to answer questions about your plan and employees.

A highly compensated employee (HCE) is a participant of the plan based on one of the following:

1. Earning more than a specific dollar amount in the prior 12 months—published annually by the IRS. For the 2022 plan year, an employee who earns more than $130,000 in 2021 is an HCE. For the 2023 plan year, an employee who earns more than $135,000 in 2022 is an HCE.
2. Is a greater than 5% owner in the current plan year or prior 12 months.

What you can do now:

• Read this brochure (PDF) for HCE details and definitions.
• You’ll see HCEs we know about in the census report.
• You might have HCEs who don’t participate in the plan. You’ll need to tell us about them.

Reminder:
If you make changes to someone’s ownership percentage or key employee status, you’ll need to include the effective date of the change.

Seems simple, but the definition of compensation (some say salaries or pay) varies based on the definition in your plan document.

What you can do now: 

• Check out this chart (PDF) to understand the available compensation definitions and a comparison of each.
• Check your plan document to see which definition is used for your organization’s plan and the purpose it’s used for. 

Reminder:
When submitting your employees' salaries during the data collection process, be sure to submit $0.00 when their compensation is zero. (Individuals who are still employed but may be on a leave of absence or part-time employees who didn’t work any hours during the time being tested.)

We’d like to offer a few tips to think about as you progress through the next calendar year. The more you can manage during the year, the less work you may find yourself with next year.

Maintain your employee data.

• Be consistent when you build employees on the plan sponsor website (Participants/Manage Participant) including name, employment date, birth date, termination date, etc.
• There is a need to build employees even if they’re not deferring. A good way to think about it is, everyone that receives a W-2 from you needs to be built in Manage Participant.
• If an employee was terminated during the year, make sure it’s reported in Manage Participant.

Tasks in the to-do list

Make it a habit to always check and complete Tasks in the To-Do List when on the plan sponsor website.