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2023 5500 Participant Count


Rai123

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I did see other posts about this question but still need clarification.

We have a handful of large plan audits that fell under 100 participants with an acct balance as of 1/1/2023 but still have more than 80. All the plans in question filed as a large plan in 2022 (Schedule H audit etc). Based on our understanding of the 80-120 rule these clients can choose to continue to file as a large plan and file an audit OR they can choose to file as a small plan for 2023 and going forward until they go back up to 121 participants with a balance which will trigger an audit again.

We highly doubt the clients in question will want to continue as a large plan to avoid the cost of an audit and therefore will want to file as a small plan starting in 2023. Our concern is the few that fell right under 100 (lets say 90-99). They may have to go back to an audit soon once they hit 121 again so we want to make this clear to them.

We understand if they fall under to 79 they must file as small plan.

Is our understanding correct?

   

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2 hours ago, Rai123 said:

We highly doubt the clients in question will want to continue as a large plan to avoid the cost of an audit and therefore will want to file as a small plan starting in 2023. Our concern is the few that fell right under 100 (lets say 90-99). They may have to go back to an audit soon once they hit 121 again so we want to make this clear to them.

Right, but they should also consider the cost of going back and forth.  Lets say that 2022 was audited but not 2023.  They now need and audit for 2024.  Guess what year the auditor will need to audit anyway in order to state that the 2024 BB is correct?  2023...

I have had this discussion with several auditors, and some said they would be willing to do a simplified review (less expensive, maybe half?) in off years to keep the engagement rolling.  This would make it easier for years they need to audit, since there would not be an interruption during off years.  

Some auditors may even reject the client if its not an ongoing engagement... so that's something to consider as well before saying why pay anything for off years.

 

 

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These above comments and observations are accurate.  Whether or not to have an audit for a plan year where it is not required is a business decision for the plan sponsor after taking into consideration the potential of returning to the plan being required to have an audit. 

One factor to take into consideration when the expense of the audit is being paid from the plan.  Consider whether it is appropriate to charge the cost of a plan audit to the plan if an audit is not required.

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19 hours ago, RatherBeGolfing said:

Right, but they should also consider the cost of going back and forth.  Lets say that 2022 was audited but not 2023.  They now need and audit for 2024.  Guess what year the auditor will need to audit anyway in order to state that the 2024 BB is correct?  2023...

I have had this discussion with several auditors, and some said they would be willing to do a simplified review (less expensive, maybe half?) in off years to keep the engagement rolling.  This would make it easier for years they need to audit, since there would not be an interruption during off years.  

Some auditors may even reject the client if its not an ongoing engagement... so that's something to consider as well before saying why pay anything for off years.

thank you so much for bringing this up, we did not even consider it that! The auditors having to audit 2023 anyway and the possibility of having the auditors do a simplified audit review.

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