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How To Know If Your Plan Needs An Audit

Navigating the intricacies of employee benefit plans can be a daunting task for any company, especially when it comes to understanding whether an audit is necessary. To shed light on this crucial aspect, we’ve compiled essential information to help you determine if your plan requires an audit.

Participant Number

Once your plan reaches 100 participants, it is classified as a large plan, and is subject to annual audit by an independent qualified public accountant.

Participant Inclusion

Effective for plan years starting on January 1, 2023, participants will be included in the Form 5500 participant count if they have a balance in the plan — whether they are actively employed or terminated.

Determination Date

The first day of the plan year is the date of measurement to determine if a plan is a large plan requiring an audit or small plan filer. Initial plan years use the participant count as of the last day of the plan year.

80 ⁄ 120 Rule

Plans are permitted to file the same way they filed in the previous year if they have 120 participants or fewer, effectively pushing back the requirement of the audit until 121 participants or greater for an existing plan.

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