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week ending September 18th, 2020
With the events of this year, more plan sponsors than usual may have requested an extension of their Form 5500 filing, which means the filings are due next month. Plan sponsors with 100 or more participants must also file a financial audit along with their Form 5500. These financial audits can be useful for improving plan operations and governance. In this edition of PLANSPONSOR Weekend, you’ll find basic information you need to know from award-winning articles, tips for the audit process and suggestions for how to learn from the audit results. Stay well!
Editor's Choice
Form 5500 Basics: What Sponsors Need to Know
The purpose of Form 5500 is to obtain information regarding plan design and basic plan sponsor information, and the regulatory penalties for failures in filing the form can be severe.
What to Know About Financial Audits Filed with Form 5500s
Plan sponsors required to file a financial audit along with their Form 5500 should know how regulators use the information and how to pick the best auditor.
Ask the Experts
Tips to Reduce Participant Count to Avoid Financial Audit Requirement
“We are a small nonprofit that sponsors an ERISA 403(b) plan. Until now our plan has been small enough to avoid the plan financial audit requirement, but, due to a lot of former employees retaining balances in the plan, we will now have more than 100 participants on 1/1/2020. We can use the 80/120 rule to avoid an audit for 2020 (our plan is a calendar year plan), but I want to be proactive here to avoid crossing the 120-particpant threshold that would require audits in the future.  Are there any steps I can take to reduce the number of participants in the plan?”
Engaging With Plan Auditors Can Improve Plan Operations and Governance
In testimony to the ERISA Advisory Council, James Haubrock, with the American Institute of Certified Public Accountants (AICPA), explained how using findings from retirement plan financial audits can help plan sponsors improve their processes and compliance.
Retirement Plan Financial Audit Processes Are Evolving
New processes and systems can cut costs for plan sponsors, streamline the work and allow for any discrepancies to be caught earlier.
Popular Reads
Contribution Limits Unchanged for 2021
Most contribution and benefit limits for employer-sponsored plans remain unchanged for 2021, according to the IRS.
House Committee Introduces ‘Securing a Strong Retirement Act of 2020’
The legislation proposes expanding automatic enrollment in retirement plans, and expanding retirement savings options for nonprofit employees, among other things.
Examining Trump and Biden’s Plans on Social Security, 401(k)s and Taxes
The two candidates differ in their approaches to several key areas of importance in the retirement planning industry.
2020 Recordkeeping Survey
Data and Research
COVID-19’s Effect on Retirement Savings Could Be Long-Lasting
Actions detrimental to employees’ long-term financial security have increased 50% since April, and illustrations show the effect of some of those actions on account balances at retirement.
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