The Department of Labor issued an updated Fact Sheet outlining revisions to the Form 5500 Annual Return/Report of Employee Benefit Plans and Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plans in 2023. These updates impact plan years starting on or after January 1, 2023.
Key Changes
The most significant adjustment the new Fact Sheet outlines is a new participant count method for determining eligibility for simplified reporting options for small plans. This change significantly affects the assessment of audit requirements for employee benefit plans, with the goal of decreasing the number of large plans subject to audits.
Previously, defined contribution plans with fewer than 100 eligible participants at the start of the plan year were generally exempt from attaching audited financial statements to the Form 5500. Under the new method, participants are counted based on those with account balances at the beginning of the plan year, as reflected on the Form 5500. This change means that companies with 100 or more eligible participants but fewer than 100 participants with existing balances at the beginning of the plan year are no longer required to have an audit. However, plans can still choose to undergo an audit voluntarily to ensure compliance or determine any issues before an audit is required.
What This Means for You
Navigating employee benefit and retirement plan audits can be intricate due to compliance criteria and regulatory complexities. If you're unsure whether this change impacts your organization’s audit requirement, reach out to our Employee Benefit Plan team for clarification.
Our team at Baldwin CPAs is well-versed in the regulatory requirements of EBP audits and is dedicated to helping ensure you remain in compliance.
