Art of the Qualified Plan Audit

In Summary Counting All Roth Dollars: All Roth contributions a High Earner makes count toward the mandate, regardless of when they are made. This means a participant who contributes a portion of their regular 402(g) limit on a Roth basis might already satisfy the catch-up requirement before their total contributions exceed the 402(g) limit. Plan … Continued

In Summary Understanding the First RMD and Subsequent Deadlines: Your first Required Minimum Distribution (RMD) is due by April 1 of the year after you turn 73 or, if your plan allows, the year you retire (whichever is later). However, 5% owners must begin by 73 regardless of employment. All subsequent RMDs are due by … Continued

In Summary New Comparability Plans, a Flexible Tool for Business Owners: These are qualified profit-sharing plans that allow employers to divide employees into different groups, or “classes,” to provide different contribution percentages to each. This design is specifically intended to maximize the contributions going to older, higher-paid owners and key employees while providing a more modest, … 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

  The Internal Revenue Service has announced adjustments on the limitations affecting retirement plans. In particular, participants can now elect to defer up to $23,500 to 401(k), 403(b), and 457(b) Plans in 2025 compared to $23,000 in 2024. Below is a chart that outlines updated employee benefit plan limits: PLAN LIMITS RETIREMENT & SOCIAL SECURITY … Continued

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