Confusion with Short Plan Year Audit and 2023 Audit Rule Changes

Hello - a client has a new plan with a short initial plan year in 2022. (200 eligible; 20 participant account balances).  This plan can use the seven months or less rule for the the audit for the short plan year to be deferred until the following plan year.   

Since there are only 20 participant account balances (restaurant group), does this mean the plan does not have to have an audit for 2022 or 2023? 

Thank you for your thoughts and any guidance you may have - not able to locate anything addressing this situation.

Wow that's a good question. I would assume absent specific guidance the 2022 audit would be required to be attached to the 2023 return since the 2022 audit is just being deferred under the rule. That is it is still required. And the audit relief for plans under 100 accounts is applicable to 2023 and does not go back to 2022 as far as I can tell.

Here’s the rule for delaying, not excusing, an independent qualified public accountant’s report. Observe the several mentions about both plan years.

29 C.F.R. § 2520.104-50(b) https://www.ecfr.gov/current/title-29/part-2520/section-2520.104-50#p-2520.104-50(b).

Even if a later plan year begins with fewer than 100 counted participants, consider that there are several other conditions for excusing an independent qualified public accountant’s audit of the plan’s financial statements.

29 C.F.R. § 2520.104-46(b) https://www.ecfr.gov/current/title-29/part-2520/section-2520.104-46#p-2520.104-46(b).