Art of the Qualified Plan Audit

In Summary SECURE 2.0 Expands Coverage: The SECURE 2.0 Act’s Long-Term Part-Time (LTPT) rules, effective for 403(b) plans as of January 1, 2023, require employers to permit employees to make elective deferrals if they work 500-999 hours annually for two consecutive years (starting with the 2023 plan year) and have reached age 21. Impact on … 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 Audit Threshold Change: There was a 2023 change to the Form 5500 participant count rule, which now excludes eligible participants who do not have an account balance on the first day of the plan year from the audit-triggering count. Timing Discrepancies: Various scenarios—including plan mergers, trade date vs. settlement date differences, and spinoffs—create … Continued

The Office of the Chief Accountant (OCA) in the Employee Benefit Security Administration (EBSA) of the Department of Labor (DOL) has released a 2023 Audit Quality Study covering the quality of audits being performed by independent qualified public accountants (IQPAs).  This is the fourth study to be performed with prior studies being performed in 2015, … Continued

Waiting for the other shoe to drop is an idiom that means to wait for an expected and inevitable event to occur, usually a negative one. The idiom comes from the idea of a person being disturbed by a neighbor who dropped one shoe on the floor and is waiting for the second shoe to … Continued

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law in December 2019, brought about significant changes to retirement planning in the United States. Among its many provisions, one notable alteration has positively impacted Roth 401(k) accounts – the elimination of Required Minimum Distributions (RMDs). Understanding Roth 401(k)s Roth 401(k) accounts combine … Continued

In our previous blog post, Pooled Employer Plans (PEPs): The Basics, we outlined the basics of a PEP and will not dig into the details of the financial reporting requirements for these plans. The administrator of a PEP must file an annual Form 5500, Annual Returns/Reports of Employee Benefit Plan, to which the PEP administrator … Continued

The Rule Individuals who turn age 72 after December 31, 2022, AND who reach age 73 before January 1, 2033, have a compulsory RMD age of 73. What It Means Individuals who turn 73 during 2023 must take an RMD for 2023 by April 1, 2024, but individuals who turn 72 during 2023 do not … Continued

Retirement Readiness vs. Immediate Financial Needs Life is a balancing act. Regulators strive to fight leakage by imposing penalties on early distributions, but they also don’t want to add to legitimate unforeseen and extreme emergency situations by imposing penalties when participants are in trouble. At the same time, regulators don’t want to impose administrative burdens … 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