| Dear Center Members: |
This alert contains information regarding:
- Changes to 2023 Form 5500
- New EBPAQC audit evidence resources
- ERISA Advisory Council
- Member benefit – AICPA employee benefit plans conference
- EBPAQC website access
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Changes to the 2023 Form 5500
The U.S. Department of Labor, the IRS, and the Pension Benefit Guaranty Corporation issued the third and final phase of changes to the Form 5500 and Form 5500-SF Short Form related to the implementation of a September 2021 regulatory proposal (see EBPAQC Alert #478). These changes, which apply beginning with 2023 plan year reports that generally will be filed beginning in 2024, include:
- A consolidated Form 5500 reporting option for certain groups of defined contribution retirement plans. The final rule provides that a defined contribution group (DCG) reporting arrangement is treated as a new type of DFE that is required to: (1) file a Form 5500 under rules and conditions generally applicable to large defined contribution pension plans; (2) report specific plan-level information on the new Schedule DCG regarding each individual plan in the DCG, which includes an audit report for each large plan and each small plan that does not meet the conditions for a waiver of the audit; and (3) ensure that each individual plan included in the DCG filing meets specified eligibility conditions that are consistent with SECURE Act Section 202 statutory criteria.
- Improved reporting by pooled employer plans and other multiple employer plans. The final rule adds a new Schedule MEP (Multiple Employer Pension Plan Information) to the Form 5500 and a limited number of additional data items elsewhere on the Form 5500 relevant to MEPs. A new checkbox will be added to the Form 5500 to indicate that Schedule MEP is attached to the Form 5500.
- A change in the participant-counting methodology for determining eligibility for simplified reporting alternatives available to small defined contribution plans (generally plans with fewer than 100 participants), including the conditional waiver of the audit requirement. Prior to the change, in counting participants for the purpose of determining whether a plan may file as a small plan, individuals were considered participants a defined contribution retirement plan when they have satisfied the plan's age and service requirements for participation (i.e., eligible to participate), even if they have elected not to participate in the plan. Under the new methodology, defined contribution retirement plans will use the number of participants with account balances as of the beginning of the plan year in counting participants. This change in methodology is expected to result in a reduction of 8,036 defined contribution retirement plan audits.
- Additional breakout categories added to Schedule H breakout of “Administrative Expenses Paid by the Plan.” The breakouts for administrative expenses will now be “Salaries and allowances,” “Contract administrator fees,” “Recordkeeping fees,” “IQPA audit fees,” “Investment advisory and investment management fees,” “Bank or trust company trustee/custodial fees,” “Actuarial fees,” “Legal fees,” “Valuation/appraisal fees,” “Other Trustee fees/expenses,” and “Other expenses.”
- Changes to Schedule R related to financial and funding reporting by PBGC-covered defined benefit plans. The changes modify Schedule R, line 19a, to require that all defined benefit pension plans (except DFEs) with 1,000 or more participants at the beginning of the plan year show the end-of-year distribution of assets, broken down in seven reconfigured categories of plan assets, and provide clarification concerning classification of atypical investments; modify Schedule R, line 19b, to change the available categories for current average duration; and eliminate Schedule R, line 19c.
- The addition of selected Internal Revenue Code compliance questions to improve tax oversight and compliance of tax-qualified retirement plans.
- Technical and conforming changes as part of the annual rollover of forms and instructions.
The Federal Register notices also include appendices that describe the changes to the forms and instructions as well as a regulatory impact and paperwork burden analyses. A more detailed summary of the annual reporting changes is included in a fact sheet posted on the DOL’s website (linked here). Mock-ups of the forms and instructions will be available at reginfo.gov as part of the Paperwork Reduction Act clearance process. The release of “for information-only” copies of the forms and instructions will happen later in 2023.
Click here for the News Release, Department of Labor Issues Final Rules on Changes to 2023 Form 5500, Form 5500-SF Employee Benefit Plan Reports.
Click here to review the Federal Register Notice of Final Forms Revision.
Click here to review the Notice for Final Rulemaking.
New EBPAQC Audit Evidence Resources
The EBPAQC has developed two new audit evidence resources to assist members in their EBP audits. The primer, Audit evidence in an employee benefit plan, was developed to assist members in understanding the types of information that may be available to employee benefit plan auditors. It provides a basic overview of AU-C section 500, addressing terms and definitions; forms and sources of information in an EBP audit; evaluating audit evidence, including its relevance and reliability, and the controls over information to be used as evidence; and audit evidence by EBP audit area. This primer also includes references to other helpful resources.
Click here to access the primer.
The EBPAQC tool, Common sources of audit evidence used in testing investment valuations, was developed to assist EBP auditors in identifying potential sources of audit evidence to be considered when testing the valuation of investments for a plan subject to ERISA. The matrix provides general descriptions of common investments in employee benefit plans and lists sources of audit evidence frequently used to support the investment balances, presentation, and financial statement disclosures. It also includes helpful tips to better understand certain investments and issues that may affect audit considerations, and provides a general description of the appropriate classification on Form 5500 and other Form 5500 reporting requirements.
Click here to access the tool.
Former EBPAQC Executive Committee Member Appointed to DOL’s ERISA Advisory Council
Gwen Mazzola, CPA, former EBPAQC Executive Committee member, has been appointed to a three-year term as the accounting representative on the DOL's ERISA Advisory Council. The Advisory Council provides advice to the DOL Secretary on policies and regulations affecting employee benefit plans subject to ERISA. Gwen is a partner with HoganTaylor LLP and serves as the leader of its employee benefit plan practice. She is a nationally recognized expert on ERISA accounting and auditing issues and a frequent instructor for employee benefit plan accounting and auditing educational programs and also serves as Chair of the AICPA Employee Benefit Plan Conference Committee. Gwen succeeds James Haubrock, retired partner of Clark, Schaefer, Hackett & Co in Dayton, Ohio.
May 8-10 AICPA Employee Benefit Plans Conference (in-person and live online) - Special Member Benefit
The AICPA Employee Benefit Plans Conference will be held May 8-10 at the Gaylord Rockies Resort & Convention Center, Denver, CO. This 2 ½ day event has in-person and live online options and offers up to 24 hours of CPE credit.
- Hear from regulators at DOL and IRS on important EBP initiatives
- Sessions on various aspects of employee benefit plan auditing, including new standards
- Tackling pain points in data privacy
- Special recognition to the tax professional's role in EBP compliance
- Sessions identified to meet your experience level: Foundational, Intermediate, Advanced
EBPAQC members qualify for a special $100 discount. Be sure to enter the coupon code "EBPAQC." Register by March 24, 2023, to receive an additional early bird discount of $100.
Click here to register for the May 8-10 AICPA Employee Benefit Plan Conference.
EBPAQC Website Access
On March 25 and 26, 2023, members will not be able to access the EBPAQC Website since the entire AICPA site will be unavailable that weekend due to system maintenance. If you have any specific items you may need to access from our site that weekend, please pull them down in advance. We apologize for any inconvenience this downtime may cause.
Sincerely,
AICPA Employee Benefit Plans Audit Quality Center |
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