Skip to main content

Prepare for new retirement plan reporting and audit methodology changes

two business men talking

The U.S. Department of Labor, Internal Revenue Service and Pension Benefit Guaranty Corporation released changes to the 2023 Form 5500 and Form 5500-SF on Feb. 23. The revisions incorporate statutory amendments to ERISA and the Internal Revenue Code enacted as part of the SECURE Act for multiple-employer plans and groups of plans.

They also made changes that are “intended to improve reporting of certain plan financial information regarding audits and plan expenses and enhance the reporting of certain tax qualification and other compliance information by retirement plans.”

Of particular note is a change in the participant-counting methodology for determining eligibility for simplified reporting alternatives available to “small plans” (generally plans with fewer than 100 participants). 

Under the current methodology, an audit is required for all plans whose total number of participants with plan accounts as of the beginning of the plan year, combined with the number of participants who are active but chose not to have contributions made under a qualified cash or deferred arrangement (and do not have an account balance) equals or exceeds 100.

The revisions will now only use the total number of participants with plan accounts as of the beginning of the year to determine whether a typically costly and time-consuming audit is required.

What does this mean?

Plans with 100 or more active employees but low to moderate participation rates may find welcome relief from the annual audit requirement. Additionally, plans that are able to process small plan cash-outs timely (under $7,000, after the passage of SECURE 2.0), could land below the threshold of requiring an audit.

While this change will not be in effect until next year’s filing season, employers can prepare by reviewing their 2022 data and ensuring that distributions are processed timely during 2023.

Please reach out to HANYS Benefit Services to discuss how we can help. For more information about retirement plans, our services and products, contact us online or call 800.388.1963.


HANYS Benefit Services is a marketing name of Healthcare Community Securities Corp., member FINRA/SIPC, and an SEC Registered Investment Advisor. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. The information in this piece is not a recommendation to invest nor should it be relied upon as instruction to invest.

Popular posts from this blog

What are Alternative Investments? 4-Part Introduction

The market has seen a lot of uncertainty in recent years. Because of this, many organizations are looking for new ways to diversify their investment portfolios. Our best-kept “not-so-secret” secret: alternative investments. In this blog, we'll explore alternative investments with a focus on how they can potentially shield your portfolios from downside market volatility. In addition, we'll break down its benefits and risks and whether it could be a good fit for you. Part 1: What are alternative investments? Alternative investments may help diversify your investment portfolios through non-traditional investment strategies. Non-traditional investment options have varying liquidity ranges depending on the strategy and fund structure. Alternative investments are sometimes referred to as alternative assets. According to the Harvard Business School , the seven types of alternative investments are: private equity; private debt; hedge funds; real estate; commodities; collectibles; and s

Section 125 – Cafeteria Plans Overview

A Section 125 plan, or cafeteria plan , allows employees to pay for certain benefits on a pre-tax basis. Employers use these plans to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Paying for benefits on a pre-tax basis reduces the employee’s taxable income and, therefore, reduces both the employee’s and the employer’s tax liability. To receive these tax advantages, a cafeteria plan must comply with the rules of Section 125 of the Internal Revenue Code and related IRS regulations. Under these rules, a Section 125 plan must have a written plan document and can only offer certain qualified benefits on a tax-favored basis. Once an employee makes a Section 125 plan election, they may not change that election until the next plan year, unless the employee experiences a permitted election change event. Also, for highly compensated employees to receive the tax advantages associated with a Section 125 plan, the plan must pass

Employee benefits strategies: 5 budget-friendly ideas

Retirement and employee benefits help create a solid foundation for recruitment and retention. They’re also pivotal in enhancing job satisfaction, boosting productivity, encouraging employee well-being and increasing workplace morale. With the work landscape evolving rapidly, organizations are revisiting their offerings to develop stronger employee benefits strategies.  The first area most small- and mid-size employers investigate is quick, short-term ways to foster company culture. In this blog, we’ll cover budget-friendly ideas to improve your employee benefits initiatives. Think of them as smaller action items that can help you gain a competitive edge. Then, we’ll take a closer look at how customizing your benefits plan can support your new efforts.  1. Promote a healthy work culture  Investing in employee benefit plans is not just about fulfilling a checklist. It's about creating an environment where employees feel supported in both their professional and personal lives. Benefi