Art of the Qualified Plan Audit

403(b) Plan Eligibility Exclusions Before SECURE 2.0 403(b) plans are bound by a universal availability mandate, whereby if one employee has the opportunity to defer, all employees must have the opportunity to defer. Since 1989, the universal availability mandate could be subject to the following exceptions, which allowed 403(b) plans to exclude:   Student employees; … Continued

Long-term, Part-time employees became eligible for the first time in 2024 for for-profit corporations and in 2025 for nonprofit corporations. 403(b) plan sponsors’ auditors will request backup for LTPT employee identification, eligibility, and their effective opportunity to defer during next year’s audits. This blog will explain the rules and the best practices for employers challenged … Continued

Do You Have a Template for a Request for Proposal (RFP) for a 401(k)/403(b) Plan? Almost every time I present an educational seminar, at least one attendee asks me if I have a template for a retirement plan audit RFP. After discussing the importance of selecting a quality plan auditor and providing a list of … Continued

In Summary Final Form 5500 Filing, Asset Distribution, and Legal Title: A plan’s final Form 5500 filing obligation is triggered not by the effective date of termination, but by the complete distribution of all assets. In a merger, the final filing is determined by the date the legal title of the assets transfers to the … Continued

In Summary Designated Roth Accounts Contribution Rules: Participants in 401(k), 403(b), or 457(b) plans can make after-tax contributions to a designated Roth account. These contributions are combined with any pre-tax deferrals to count toward the annual limit ($23,500 in 2025). Unlike Roth IRAs, there are no income caps preventing high earners from contributing to their … Continued

In Summary Roth’s Vision: Senator Roth’s legacy continues through tax-free retirement innovation, as his creation of the Roth IRA in 1997 transformed retirement savings and inspired later Roth-style accounts like Roth 401(k), 403(b), and 457(b). Mandatory Roths Era: Rothification marks a shift toward mandatory after-tax contributions, beginning in 2026 when High Earners must make catch-up … Continued

In Summary Introducing the Super Catch-Up: Effective January 1, 2025, plan sponsors can optionally allow participants aged 60 to 63 to contribute a “super catch-up,” which is 150% of the regular catch-up limit. For 2025, this allows an additional $11,250, bringing the total maximum deferral for this age group to $34,750. Correct Classification: A contribution … Continued

In Summary Deficient Filings vs. Delinquent Filings: During the AICPA conference, the DOL’s Marcus Aron clarified that the department strongly prefers a “deficient” filing (filed on time but incomplete, such as missing an audit) over a “delinquent” filing (not filed at all). A deficient filing can be amended later to include the audit report and … Continued

In Summary IRS Notice 2024-73 Clarifies New Part-Time Rules: There are new IRS guidance effective January 1, 2025, which reconciles existing 403(b) plan exclusions with the Long-Term Part-Time (LTPT) rules. Specifically, employees working less than 20 hours per week can be excluded until they meet the LTPT criteria (age 21 with two consecutive years of … Continued

In Summary New IRS Guidance for IBO Flexibility: IRS Notice 2024-77 provides flexibility for inadvertent benefit overpayments (IBOs) from retirement plans. It confirms that employers are permitted, but not required, to seek recoupment of funds paid to a participant by mistake. Choosing Not to Recoup Preserves Rollover Status: If a plan sponsor forgives the overpayment, the … Continued