Art of the Qualified Plan Audit

But It’s My Money! Business owners and Highly Compensated Employees (HCEs) are often shocked to hear that they cannot contribute the maximum 401(k) or 403(b) deferral ($23,000 and $22,500 for 2024 and 2023, respectively) because their plan did not pass the discrimination tests. Much to their surprise, through the Actual Deferral Percentage (ADP) and the … Continued

Nervous apprehension tends to overwhelm new 401(k) audit clients who don’t know how involved they will need to be in the document production for the audit. Often, they are hopeful that one or more of their service providers will “take care of everything” as they promised. The bottom line is that the extent of the … Continued

Death by a thousand cuts. That’s what initial 401(k) and 403(b) audit clients fear their first financial statement audit will feel like. Fear of the unknown leads the human mind to worst case scenarios. Could I fail the audit? Sure, anything is possible. Will I fail my first audit? Not likely. Even if the audit … Continued

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

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

Posted By: Saaib T. Uppal, CPA, QKA IRS Announces Increases on Benefits and Contributions Dollar Limitations for 2023 The IRS has announced cost-of-living adjustments that should be noted for retirement planning purposes. Below is a chart that outlines employee benefit plan limits for 2023: Plan Limits RETIREMENT & SOCIAL SECURITY 2023 Limit 2022 Limit 2021 Limit … Continued

Posted by Maria T. Hurd, CPA Yes, the Audit Extends to Excluded 403(b) Employees: Testing Compliance with Universal Availability It’s never a good sign when an employer sponsoring a 403(b) plan says: “You don’t need to see backup for employees who are excluded from the plan.” Ohh! But we do! Not often, but sometimes, clients … Continued

Posted By: Maria Hurd, CPA Top Five Operational Errors of 403(b) Plans Oops! I did it again… No matter how hard we try, there are mistakes we are doomed to make again and again, even when we know the rules all too well. The reasons are valid, and they are countless: mindlessness, being in a … Continued

Posted by Maria T. Hurd, CPA Where have you worked, for how long, and how much have you contributed to the 403(b) plan? These are all the questions that make up the puzzle pieces necessary to compute each participant’s available 403(b) catch-up. Participants in a 403(b) plan can make an additional contribution once they have … Continued