Art of the Qualified Plan Audit

In Summary Foundational Plan Governance: Auditors will require all core legal and governance materials, such as the executed plan document, the most recent IRS determination letter, committee minutes, proof of the ERISA fidelity bond, and copies of all service provider agreements. Financial Reporting: The audit relies on detailed financial data, including the draft Form 5500, year-end … Continued

In Summary Understanding and Reporting Late 401(k) Deposits: Late deposits of employee 401(k) contributions violate ERISA and are considered prohibited transactions; they must be reported on the Form 5500 (Schedule H for large plans, Line 10a for small plans filing 5500-SF). Two Paths to Correction Exist: Employers can rectify late deposits through self-correction, which requires … Continued

In Summary The 403(b) Audit Disclaimer’s Origin: The requirement for ERISA-covered 403(b) plans to have audited financial statements began in 2009, but due to a historical lack of employer involvement with older contracts, plan sponsors often could not locate all plan assets. This impossibility led to auditors issuing disclaimed opinions on the financial statements’ completeness. … Continued

Posted by Tyler Starr, CPA The American Institute of Certified Public Accountants’ (AICPA) Auditing Standards Board (ASB) issued the Statement on Standards for Attestation Engagements (SSAE) No. 19, Agreed-Upon Procedures Engagements, in December 2019. SSAE 19 supersedes SSAE 18 AT-C section 215 of the same name and also amends certain provisions of SSAE 18 section … Continued

In Summary New Flexibilities Introduced for Plan Sponsors: The law permits businesses to adopt qualified plans until the tax return due date (including extensions) for employer contributions, applying to tax years after 2019. It also provides a remedial amendment period through the 2022 plan year for making retroactive changes to reflect new operational rules. The … Continued

In Summary Revenue Provisions Affecting Required Distributions and Penalties: The law extends the payout period for most non-spousal inherited retirement accounts (DC plans and IRAs) from five years to ten years, eliminating the lifetime distribution option for most non-spousal beneficiaries. Additionally, penalties for failure to file Form 5500, Form 8955-SSA, and other required statements or … Continued

Posted by Tyler Starr, CPA The most common error found during the audit of an employee benefit plan is the incorrect definition of compensation being used for contribution purposes. Whether the error is related to payroll coding issues or not fully understanding the plan provisions, plan compensation can be one of the biggest traps for … Continued

Posted by Tyler Starr, CPA The IRS issued a private ruling on August 17, 2018, to allow an unnamed company to implement a new type of benefit for employees with student loan debt who were eligible to participate in its 401(k) plan. Prior to the private ruling, the company offered a 5% match contribution if … Continued

In late 2018, the Auditing Standards Board (ASB) voted to issue a final balloted draft of SAS 13X, which addresses the auditor’s responsibility to form an opinion and report on the audit of financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA).

In my previous blog, “How to Order a Triple Stack Match for your Plan,” I discussed the basics of the triple stack match formula.