5500 Plan Audit Requirement Rule Change for 401(k)/403(b) Plans

By Robert McGowan

May 23, 2023

The DOL has amended the Form 5500 forms and instructions for 2023 and significantly changed how a plan sponsor counts participants for determining whether it is eligible for the small plan simplified Form 5500 reporting.

What’s the new rule? Generally, plans with fewer than 100 participants can take advantage of simplified Form 5500 reporting—most notably, the plan does not have to be audited by an independent qualified public accountant. Rather than determining whether that threshold is met by counting all participants that are either eligible or have an account balance, the new rule will count only the number of participants and beneficiaries with account balances at the beginning of the plan year.

This is effective immediately for plan years beginning on or after January 1, 2023. Filing and audit requirements for the 2022 plan years will still be determined based on the prior counting rules.