Art of the Qualified Plan Audit

In Summary PEP Definition and Structure: Pooled Employer Plans (PEPs), established by the SECURE Act, allow unrelated employers to join a single defined contribution plan, which is maintained by a pooled plan provider (PPP). This “open MEP” structure treats the plan as a single entity for both ERISA and IRC compliance, eliminating common-interest requirements that … Continued

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 Implementation Requirements and Effective Dates: Statement on Auditing Standards (SAS) 136 is effective for audits of periods ending on or after December 15, 2021, governing audits of employee benefit plans (EBPs) subject to ERISA. Compliance is mandatory for calendar year 2021 plans and subsequent periods, with permitted early compliance for the immediate preceding … Continued

In the past, innocent participants paid the price for their employers’ mistakes In our previous blog Give it BACK!!!”…”No!”…”OK, Keep It!, we described how the previous law required retirement plan fiduciaries to take reasonable action to recover any overpayment of plan benefits, even when the overpayment is generally the employer’s fault. Reasonable action meant an … Continued

Not Enough RMD Participants must take an Required Minimum Distribution (RMD) from retirement plans and IRAs. 403(b) plans often have more than one account in the name of each participant. While each 401(k) plan must issue its own RMDs, an individual can take one RMD distribution for the entire amount computed using the balances in … Continued

In its quest to Set Every Community Up for Retirement Enhancement, SECURE 2.0 enhanced the Long-Term Part-Time (LTPT) rules of Secure 1.0 by making them applicable to 403(b) plans. Since employees are more likely to contribute to an employer-sponsored retirement arrangement than an Individual Retirement Account, and more Americans are working part-time since the pandemic, … Continued

In Summary SECURE 2.0 Act Simplifies Hardship Withdrawal Administration: Section 312 of the SECURE 2.0 Act grants plan sponsors of 401(k), 403(b), and 457(b) plans relief by permitting reliance on an employee’s written certification that the distribution meets the requirements for immediate need, necessary amount (including taxes), and lack of alternative means, unless the 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