Art of the Qualified Plan Audit

Retirement Readiness vs. Immediate Financial Needs Life is a balancing act. Regulators strive to fight leakage by imposing penalties on early distributions, but they also don’t want to add to legitimate unforeseen and extreme emergency situations by imposing penalties when participants are in trouble. At the same time, regulators don’t want to impose administrative burdens … 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

SECURE 2.0: Mandatory Automatic Enrollment Coupled with Corrective Contribution Relief Employees Plan to Make the Right Choice…Later When it comes to choosing to save for retirement, people tend to be short-sighted. Many eligible employees don’t choose to participate in their employer-sponsored retirement plans. Behavioral finance studies show that people tend to imagine themselves making the … 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

Enhanced Correction Options: I Didn’t Know What I Was Missing! Mistakes happen…all the time, especially in retirement plan administration. For years, I have been thankful for the self-correction opportunities granted by the IRS Program, the Employee Plan Compliance Resolution System. With each update to the program, my clients would benefit from additional opportunities to self-correct … Continued

In Summary Increasing Retirement Savings and Access: To expand coverage, new 401(k) and 403(b) plans must implement automatic enrollment and escalation starting in 2025. Additionally, the age for Required Minimum Distributions (RMDs) is raised to 73 in 2023 and 75 in 2033, and Roth accounts are exempt from RMDs while the participant is alive starting … 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: Saaib T. Uppal, CPA, QKA IRS Announces Increases on Benefits and Contributions Dollar Limitations for 2023 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 2023: Plan Limits RETIREMENT & SOCIAL SECURITY 2023 Limit 2022 Limit 2021 Limit … Continued

In Summary Service Provider and Fiduciary Best Practices: Service providers should have a formal, documented cybersecurity program, conduct annual risk assessments, and secure a reliable third-party annual audit of security controls. Essential elements also include strong access controls, encrypting sensitive data, and maintaining an effective business resiliency program to address disaster recovery and incidents. Selecting … Continued

In Summary Expanded Self-Correction Possibilities: Eligibility for the Self-Correction Program (SCP) significantly increased, primarily by extending the time frame for correcting significant operational failures from two years to three years following the failure’s plan year. The ability to use a retroactive plan amendment to correct an operational failure was also broadened by removing the prior … Continued