Earlier this year, the IRS, Department of Labor (DOL) and Pension Benefit Guaranty Corporation (PBGC) issued final changes to the annual reporting requirements of employee benefit plan sponsors for their 2023 filings of IRS Forms 5500 and 5500-SF. The revisions were introduced as part of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
The Employee Retirement Income Security Act of 1974 (ERISA) and IRS require sponsors of employee retirement savings plans, such as 401(k)s and 403(b)s, to file IRS series 5550 annual returns/reports providing details about their plans’ tax qualifications, operations, finances and participants. The filing deadline is July 31 of the year following the plan’s year-end (or October 15 with a filing extension). In addition, the law requires employers with 100 or more participants in their defined contribution plans to engage an independent public accountant to audit the plan’s financial statements, which must be filed along with their annual returns/reports.
New Requirements for 2023 Plan Years
Defined-contribution plans with less than 100 eligible participants at the beginning of a plan year historically could qualify to file a simplified Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan. However, for 2023 reporting purposes, “eligible participants” is limited to the number of employees with a balance in their accounts at the beginning of the plan year. In other words, when determining whether they fall below the 100-participant threshold, employers may exclude employees who are eligible but do not actually participate in their plans. With these changes, a higher percentage of plan sponsors filing 2023 annual reports in calendar year 2024 will qualify to file the shorter form and avoid the time and costs of a professional audit.
About the Author: Sean Deviney is a CFP®* is a retirement plan advisor and a director with Provenance Wealth Advisors (PWA), an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with PWA Securities, LLC (PWAS). For more information, call (954) 712-8888 or email firstname.lastname@example.org.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., Nineteenth Floor, Ft. Lauderdale, FL 33301 (954) 712-8888.
Sean Deviney is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Investments mentioned may not be suitable for all investors. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Please note, changes in tax laws may occur at any time and could have a substantial impact on each person’s situation. While we are familiar with the tax provisions presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
Posted on August 24, 2023
* Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.