Art of the Qualified Plan Audit

In Summary Plan Qualification and Tax Treatment: Retirement plans established in Puerto Rico (PR) receive favorable U.S. tax treatment under ERISA Section 1022(i). Plans covering only PR residents (1022(i)(1)) are exempt from U.S. taxation on trust income, while plans electing full U.S. compliance (1022(i)(2)) can cover both U.S. and PR employees. Key Regulatory Differences Must Be … Continued

On January 31, 2024, Hacienda, (the Puerto Rico Department of the Treasury) issued Internal Revenue Circular Letter No. 24-01 (CL IR 24-01) announcing the 2024 limits for Puerto Rico-qualified retirement plans according to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended. Following are the applicable 2024 limits for qualified defined … 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

In Summary Correction Options for Retirement Plan Errors: The various methods available for calculating corrective contributions and their associated earnings, aiming to make participants whole, range from using actual individual investment returns (Option 1) to employing reasonable estimates like the plan’s weighted average rate of return (Option 3). When to Use Simple Estimates and the … Continued

In Summary ADP/ACP Testing Limits HCEs: Discrimination tests like ADP and ACP limit how much Highly Compensated Employees (HCEs) can defer to a plan. HCE deferral limits are directly tied to the average contribution percentage of Non-Highly Compensated Employees (NHCEs). Zero Contributions Impact Averages: All eligible employees, even those who contribute zero, must be included … 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

In Summary PEP Structure Under the SECURE Act: Pooled Employer Plans (PEPs) are a new type of “open” multiple-employer plan (MEP) created by the SECURE Act, which eliminates the “common interest” rule previously required for closed MEPs. A PEP must designate a Pooled Plan Provider (PPP) as the named fiduciary and plan administrator, offering employers … 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 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 2024: Plan Limits RETIREMENT & SOCIAL SECURITY 2024 Limit 2023 Limit 2022 Limit Section 401(k), 403(b), 457(b) Elective Deferrals $23,000 $22,500 $20,500 401(k) or 403(b) Catch-Up Contributions $7,500 $7,500 $6,500 … Continued