Art of the Qualified Plan Audit

In Summary Hardship Distribution Substantiation Options: The plan may require backup documentation for the hardship reason and amount, or allow the participant to self-certify the hardship reason, amount, and financial necessity in writing. Self-certification requires the employer to provide specific written notifications regarding taxability and rules, and the participant must maintain the backup. Preventing Ineligible … Continued

In Summary GAAP and ERISA Require Disclosures for Certain Transactions: Related Party transactions that are material to the financial statements must be disclosed in the notes, providing details like the relationship, transaction description, and dollar amounts (FASB ASC 850). Separately, all transactions with the broader group of Parties-in-Interest must be disclosed unless a statutory or … Continued

Posted By Maria Hurd, CPA The SECURE Act increased IRS Late Filing Penalties for Form 5500 by how much? How can I avoid them? IRS Penalties Tenfold. That’s how much the SECURE Act (the “Act”) increased the penalty for the late filing of a Form 5500 –TENFOLD! Before the Act, the IRS could assess a … Continued

In Summary Correction for a Missed Safe Harbor Notice: If the failure to provide a safe harbor match plan notice is merely an administrative error with no consequence (the employee was otherwise informed and participating), revising procedures to prevent future lapses is sufficient. However, if the missing notice results in an eligible employee being excluded … Continued

In Summary SECURE Act Changes to RMD Age: The new rules from the SECURE Act raise the age for Required Minimum Distributions (RMDs) from 70½ to 72. Terminated non-5% owners must take their first RMD by April 1 of the year following the later of turning 72 or retiring. Five percent owners must begin RMDs … Continued

In Summary Plan Error Correction Methods in EPCRS: Operational errors in retirement plans can be fixed through the IRS Employee Plans Compliance Resolution System (EPCRS) using the Self-Correction Program (SCP) for certain timely-corrected and insignificant errors, the Voluntary Compliance Program (VCP) with an IRS fee and submission for significant or specific errors, or the Audit … Continued

In Summary Nondiscrimination Tests Limit HCE Contributions: Company owners and highly compensated employees (HCEs) may not contribute the maximum 401(k) limit because of nondiscrimination tests like the ADP and ACP tests. These tests ensure that HCE contributions are not disproportionate and are limited based on the average deferral and match percentages of non-highly compensated employees … Continued

Posted By Maria T. Hurd, CPA, RPA Our first blog about the CARES Act titled Unsaving for Retirement in Pandemic Times discussed the original definition of a Qualifying Individual eligible to take the additional Coronavirus-related loans and distributions. The original definition of a qualified individual applied if the participant in the plan experienced a financial … Continued

Posted by Maria T. Hurd, CPA, RPA For 403(b) plan eligibility determinations, the IRS says that “Once In, Always In” is much better than “In and Out,” so are your part-time employees “In or Out” or “In and Out”? Part-time workers and transient workers have always posed a challenge for plan sponsors trying to determine … Continued

Posted by Maria T. Hurd, CPA, RPA The SECURE Act’s provisions that encourage retirement savings and increase coverage and participation could reduce an estimated retirement savings shortfall of $3.8 trillion dollars by 3%, which does not sound like much percentage-wise, but it amounts to more than one hundred billion dollars: an unquestionably good result.  However, … Continued