Art of the Qualified Plan Audit

Not Enough RMD Participants must take an Required Minimum Distribution (RMD) from retirement plans and IRAs. 403(b) plans often have more than one account in the name of each participant. While each 401(k) plan must issue its own RMDs, an individual can take one RMD distribution for the entire amount computed using the balances in … Continued

In its quest to Set Every Community Up for Retirement Enhancement, SECURE 2.0 enhanced the Long-Term Part-Time (LTPT) rules of Secure 1.0 by making them applicable to 403(b) plans. Since employees are more likely to contribute to an employer-sponsored retirement arrangement than an Individual Retirement Account, and more Americans are working part-time since the pandemic, … Continued

In Summary SECURE 2.0 Act Simplifies Hardship Withdrawal Administration: Section 312 of the SECURE 2.0 Act grants plan sponsors of 401(k), 403(b), and 457(b) plans relief by permitting reliance on an employee’s written certification that the distribution meets the requirements for immediate need, necessary amount (including taxes), and lack of alternative means, unless the administrator … Continued

The Rule Individuals who turn age 72 after December 31, 2022, AND who reach age 73 before January 1, 2033, have a compulsory RMD age of 73. What It Means Individuals who turn 73 during 2023 must take an RMD for 2023 by April 1, 2024, but individuals who turn 72 during 2023 do not … Continued

Retirement Readiness vs. Immediate Financial Needs Life is a balancing act. Regulators strive to fight leakage by imposing penalties on early distributions, but they also don’t want to add to legitimate unforeseen and extreme emergency situations by imposing penalties when participants are in trouble. At the same time, regulators don’t want to impose administrative burdens … Continued

In Summary Counting Criterion Shifted for Audit Exemptions: Effective for plan years beginning after January 1, 2023, the Department of Labor changed the criterion for mandatory financial statement audits from the number of eligible participants to the number of participant account balances. This change exempts approximately 19,000 retirement plans, namely in industries with high turnover, … Continued

SECURE 2.0: Mandatory Automatic Enrollment Coupled with Corrective Contribution Relief Employees Plan to Make the Right Choice…Later When it comes to choosing to save for retirement, people tend to be short-sighted. Many eligible employees don’t choose to participate in their employer-sponsored retirement plans. Behavioral finance studies show that people tend to imagine themselves making the … Continued

Retirement plan administration is not a costless endeavor. Plan sponsors must administer the retirement plan following plan provisions, legislative requirements, and participant elections. To help administer the plan, plan sponsors hire service providers to help with recordkeeping, custody of assets, investment advisor tracking, and auditing the plan. Regulatory authorities want to promote retirement readiness with … Continued

Enhanced Correction Options: I Didn’t Know What I Was Missing! Mistakes happen…all the time, especially in retirement plan administration. For years, I have been thankful for the self-correction opportunities granted by the IRS Program, the Employee Plan Compliance Resolution System. With each update to the program, my clients would benefit from additional opportunities to self-correct … Continued

In Summary Increasing Retirement Savings and Access: To expand coverage, new 401(k) and 403(b) plans must implement automatic enrollment and escalation starting in 2025. Additionally, the age for Required Minimum Distributions (RMDs) is raised to 73 in 2023 and 75 in 2033, and Roth accounts are exempt from RMDs while the participant is alive starting … Continued