Art of the Qualified Plan Audit

In Summary Pooled Employer Plans (PEPs) Defined: PEPs are a type of “open” multiple employer plan established by the SECURE Act allowing unrelated employers to share a single defined contribution plan, which is treated as one plan for both ERISA and IRS purposes, without the common interest requirement that applies to “closed” MEPs. The Pooled … 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

In Summary Common Audit Findings and Simple Corrections: Typical 401(k)/403(b) audit issues, such as errors in eligible compensation or auto-enrollment, are frequently encountered. These findings generally require depositing corrective contributions, like a Qualified Nonelective Contribution (QNEC), plus lost earnings for affected participants. Even material corrections can be managed by a simple accrual, allowing the audit … Continued

In Summary Counting Criterion Shifted for Audit Exemptions: Effective for plan years beginning after January 1, 2023, the Department of Labor changed the criterion for mandatory financial statement audits from the number of eligible participants to the number of participant account balances. This change exempts approximately 19,000 retirement plans, namely in industries with high turnover, … Continued

Retirement plan administration is not a costless endeavor. Plan sponsors must administer the retirement plan following plan provisions, legislative requirements, and participant elections. To help administer the plan, plan sponsors hire service providers to help with recordkeeping, custody of assets, investment advisor tracking, and auditing the plan. Regulatory authorities want to promote retirement readiness with … Continued

Plan sponsors, third-party administrators, and other Form 5500 preparers take note! DOL representatives indicated that in some instances Part III – Accountant’s Opinion, Line 3(a) and 3(b) of the Schedule H is being filled out incorrectly. Marcus Aron (Division of Accounting Services) and Scott Albert (Division of Reporting Compliance) indicated at the 2023 Joint TE/GE … Continued

Posted By: Maria Hurd, CPA Why Ask Why? Why should the rules that determine how and how much a person can save for retirement be different depending on whether the person works for a government entity, a nonprofit, or a for-profit employer? People are people, and their retirement needs are not different based on what … Continued

In Summary New Audit Standard Introduced: SAS 136, effective for plan years ending on or after December 15, 2021, replaces the limited-scope audit with the ERISA Section 103(a)(3)(C) audit. This change mandates the auditor to provide an opinion on all financial information except for the carved-out certified investment data, which differs significantly from the former … Continued

In Summary Requirement for the Independent Audit: The Employee Retirement Income Security Act (ERISA) mandates that large retirement plans, generally those with 100 or more participants at the beginning of the plan year, must have their financial statements audited. These audited statements are required to be attached to the Schedule H of the annual Form … Continued

Is your auditor a Jack of all trades, but a master of none?