Ask the Experts March 28, 2023

Is Change Coming for 403(b) Plan 5500 Filings?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

Reported by
Q. As a small nonprofit sponsoring an ERISA 403(b) plan, 5500s have always been troublesome for us, as we have to go through the expense of hiring an auditor due to the fact that, though our plan has far less than 100 people with account balances and/or contributing to the plan in total, our participant count is over 100 for audit requirement purposes due to the universal availability requirements. I heard that the Department of Labor may have changed this rule. Is that true?

Kimberly Boberg, Taylor Costanzo, Kelly Geloneck and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: You have heard correctly! On February 23, the Department of Labor released its 2023 Form 5500 changes, which modified the participant counting methodology for small/large plan determination from all eligible participants to only those participants with account balances at the beginning of the year. This counting method will push many plans (especially 403(b) plans, due to the universal availability issue that you referenced) below the audit threshold, potentially saving plan sponsors time and money.

The bad news is that the changes are not effective until the 2023 5500 filing, which means that you are stuck with the audit requirement for one more year (the 2022 plan year).

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.

«