Exciting news! The Department of Labor announced it may eliminate the 401(k) audit requirement for plans with fewer than 100 participant accounts as of December 31, 2023.
Current DOL Regulations
The plan must undergo an audit if it has 100 eligible participants. This methodology includes counting individuals who are eligible to participate but have not elected to do so or do not have an account in the plan.
New DOL Regulations
The participant count for defined contribution retirement plans will be based on the number of participants with account balances and refers to individuals who elected to participate in the plan and/or have an account balance included in the participant count.
401(k) Plan 100 Participant Accounts Threshold
If your company-sponsored plan is close to having fewer than 100 participant accounts and has a handful of accounts that are separated from service or retired, you can request, but not require, the former employee transfer their account from the plan to decrease the participant count.
We suggest you coordinate with your 401(k) plan provider to determine if this is an option for your plan. To assist in your evaluation, we have included an example of a Form 5500 filing. It shows a plan requiring an audit for 2022 but, more than likely, will not have an audit requirement for 2023.
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