Art of the Qualified Plan Audit

Posted by Maria T. Hurd, CPA Yes, the Audit Extends to Excluded 403(b) Employees: Testing Compliance with Universal Availability It’s never a good sign when an employer sponsoring a 403(b) plan says: “You don’t need to see backup for employees who are excluded from the plan.” Ohh! But we do! Not often, but sometimes, clients … Continued

In Summary Financial Flexibility Offered to Qualified Individuals: The CARES Act permitted eligible participants affected by COVID-19 to take coronavirus-related distributions up to $100,000 from their retirement plans. Qualified individuals include those diagnosed, or those experiencing adverse financial consequences like being furloughed or unable to work due to lack of child care. Repayment is allowed … Continued

In Summary Exceptions Exist for Universal Availability: Limited exceptions permit the exclusion of certain employees from the 403(b) elective deferral opportunity, such as non-resident aliens, employees who normally work less than 20 hours per week, specific student employees, and those eligible for deferrals under certain other employer plans (401(k), governmental 457, or another 403(b)). Crucial … Continued

In Summary Administrative Improvements for Retirement Plans: Additional time is allowed for employers to adopt plans after a taxable year’s close, provided it’s before the extended tax return due date. The IRS and DOL were directed to permit certain groups of defined contribution plans to file a single aggregated annual return under specific conditions regarding … Continued

In Summary Reliance on External Parties Does Not Erase Fiduciary Responsibility: There is a misconception that service providers, like recordkeepers, are solely responsible for compliance. While these providers assist with administration, the plan sponsor retains the ultimate legal and fiduciary duty to ensure the plan operates within both the law and its own written terms, … Continued

Posted by Maria T. Hurd, CPA Where have you worked, for how long, and how much have you contributed to the 403(b) plan? These are all the questions that make up the puzzle pieces necessary to compute each participant’s available 403(b) catch-up. Participants in a 403(b) plan can make an additional contribution once they have … Continued

In Summary Expanding Access to Retirement Plans for Employers: The SECURE Act permits unrelated employers to participate in Pooled Employer Plans (PEPs), easing previous restrictions on Multiple Employer Plans (MEPs). This change, coupled with the elimination of the “One Bad Apple” rule and the requirement for only one Form 5500 and plan audit, aims to … Continued

In Summary Hardship Withdrawal Access Expanded: The Bipartisan Budget Act of 2018 significantly expanded participant access to retirement funds in hardship situations. Key changes include eliminating the mandatory six-month suspension of deferrals after a hardship withdrawal and permitting plans to remove the requirement to maximize plan loans first. These rules became mandatory for plan years … 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