Changes are coming to the Form 5500 for the 2023 plan year.
These changes are part of the Form 5500 Modernization Initiative that was announced back in 2016.
If you need help or have any questions about Form 5500, contact our Kent, WA office at (253) 852-8500 email us at info@shannon-cpas.com or contact us online.
The biggest change will be for defined contributions plans in how “large plan status” will be determined which drives the requirement to have a plan audit. In the past, the large plan status has been determined by the number of eligible participants at the start of the plan year. Starting in 2023 plan participants with account balances will be used as the methodology instead of eligible participants. This change is expected to reduce the number of large plans that will require an audit by over 8,000. It may make sense in some situations to continue doing the plan audit, in particular if you are a growing company and anticipate attaining large plan status in the near future.
There will be additional compliance questions on the Form 5500 for 2023. The IRS will gather information about the method used for coverage and nondiscrimination testing the plan performed. They will also be requesting information on the Favorable IRS Opinion Letter for the plan document.
The DOL has an ongoing goal of transparency and improved reporting of fees and expenses. For Schedule H, there will be additional administrative expense categories for 2023.
Beginning January 1, 2024, plans will have the option to electronically or paper file their Form 5558 Extension.
