Art of the Qualified Plan Audit

Background The SECURE 2.0 Act’s LTPT rule took effect on January 1, 2023, which means that as of January 1, 2025, any employee who has worked at least 500 hours (but no more than 999 hours) annually for two consecutive years (and has reached age 21 by the end of that two-year period) must be … Continued

What’s a Year-of-Service?….What Do You Need It to Be? Pension jokes and dad jokes can be corny, predictable, and unoriginal, but the truth is, they often tell the truth. One common pension joke is that if you ask an actuary how much is 2+2, he will respond: “How much do you need it to be?” … Continued

Background The DOL’s rules and regulations require the notes to audited ERISA plans’ financial statements to include an explanation of differences, if any, between the information contained in the audited financial statements and the net assets, liabilities, income, expense, and changes in net assets reported on Form 5500 Schedule H. The inconsistencies are most often … Continued

Understanding the Accrual Basis of Accounting for Revenue Recognition Unlike the cash basis of accounting, which recognizes revenue and expenses only when money changes hands, the accrual basis accounts for transactions when they are earned or incurred, regardless of the actual cash flow. The Revenue Recognition Principle dictates that revenue should be recognized in the … Continued

Timing Differences Can Make a Difference The number of participants as of the beginning of the year determines whether the plan’s financial statements must be audited. Starting in 2023, eligible participants who do not have an account balance on the first day of the plan year are no longer included in the participant count used … Continued

The House with No Rules Once upon a long time ago, I fell asleep on the couch, as I often do. My astute baby girl speed-dialed my husband to report that she was in a house with no rules, because I had fallen asleep. Also, she said there was no need for him to hurry … Continued

ERISA Section 3(14) defines a Party-in-Interest more broadly than FASB Accounting Standards Codification (ASC) 850 defines Related Parties. Specifically, 29 CFR 1002(14) defines the term “party-in-interest” as follows:   Any fiduciary (including, but not limited to, any administrator, officer, trustee, or custodian), counsel, or employee of such employee benefit plan; A person providing services to … Continued

Don’t Stand, Don’t Stand So, Don’t Stand So Close to Me Unlike unwritten rules referring to the social norms, customs, and expectations that guide behavior in various contexts, such as maximizing personal space in an elevator, or bringing a small gift when invited to someone’s house, SECURE 2.0 brings rules that must be followed effective … Continued

Background Information Puerto Rico is a territory of the United States along with American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands. The Commonwealth of Puerto Rico falls under the jurisdiction of most federal laws of the United States. However, significant taxation differences exist. Puerto Rico has its own constitution and a … Continued

On January 31, 2024, Hacienda, (the Puerto Rico Department of the Treasury) issued Internal Revenue Circular Letter No. 24-01 (CL IR 24-01) announcing the 2024 limits for Puerto Rico-qualified retirement plans according to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended. Following are the applicable 2024 limits for qualified defined … Continued