Are you sure your 401k plan needs an annual IRS Form 5500 audit?
Beginning with the 2023 Plan year, more plans will be “small enough” to qualify for an exemption.
The Department of Labor just released changes to the 2023 Form 5500 filing instructions.
If you can believe the instructions, the participant counting methodology to determine if your plan is “small enough” is changing.
From now on, only count those participants with account balances at the beginning of the year (not total eligible participants).
Many smaller plans near the threshold will undoubtedly have an easier time qualifying for the exemption.
Let’s also think about unintended consequences.
For example, will this cause smaller plans to not adopt automatic enrollment (to keep their headcount as low as possible)?