Art of the Qualified Plan Audit

In Summary Common Errors and Overpayments: Due to the complexity of retirement plan rules, errors are common, resulting in Excess Amounts (operational failures). If these excess funds are distributed to a participant, it becomes an Overpayment Failure, which can stem from issues like inaccurate testing, incorrect vesting, or ineligible distributions. Correction Relief for Inadvertent Overpayments: … Continued

In Summary Keep in Mind: 403(b) eligibility and contribution rules (universal availability, OIAI, LTPT, post-severance contributions, ACP/ADP mechanics, and annual limits) determine who may defer and how much they — or the employer — can contribute. Auditors must verify the sponsoring organization’s tax-exempt status and obtain a valid, executed 403(b) plan document, including all necessary … Continued

In Summary Accrual Basis Plan Compensation vs. Corporate Accounting: Accrual basis compensation for a retirement plan doesn’t necessarily align with the employer’s accrual basis compensation on corporate books, as many plans link the plan’s contribution obligation to the actual issuance of paychecks (which corresponds to W-2 wages received), rather than the dates the wages were … Continued

In Summary ERISA vs. FASB ERISA: Section 3(14) defines a “party-in-interest” more broadly than FASB ASC 850’s definition of “related parties,” encompassing various individuals and entities connected to an employee benefit plan, including fiduciaries, service providers, employers, and certain owners or relatives. Reporting and Disclosure Requirements for Transactions: Transactions with parties-in-interest (excluding statutory exemptions like … Continued