November 9, 2023
A defined contribution plan is required to undergo an audit if it is considered a “large” plan according to the Department of Labor (DOL). With recent changes made by the DOL to the Form 5500, they have redefined what is considered a large plan. With this change, a plan with at least 100 participants with an account balance is considered a large plan and an audit is required to be attached with the Form 5500 filing. This provision applies to defined contribution plans and is effective for plan years that begin on or after January 1, 2023.
Previously, the DOL defined large plans as a plan with at least 100 eligible participants regardless if the participants had an account balance, and the plan would require an audit. The DOL estimates that nearly 20,000 plans previously considered large plans will no longer be subject to the annual audit requirement due to this change.
However, this change has led to situations in which plan sponsors have a plan that no longer requires an audit, but would like to have the plan audited as part of fulfilling its own fiduciary duties or for other reasons (e.g., the plan has an auto-enrollment feature and the plan sponsor believes the plan will soon require an audit). Although the plan may no longer be subject to an audit requirement under the DOL’s regulations, plan management or those charged with governance may still elect to have a plan audit performed.
If you have any questions about your plan audit requirements for 2023 and going forward, please reach out to us today and we will help you with those questions.