2023 Employee Benefit Plan Reporting Changes

The Employee Benefit Plan reporting requirement updates for 2023 have proven to be significant. The changes affect plan years beginning on or after January 1, 2023. These changes are annual provisions related to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), which come directly from the U.S Department of Labor (DOL), Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC). The changes are directly related to the information provided on Form 5500 or Form 5500 SF by Plan Sponsors.

Perhaps the largest change to reporting requirements is the Participant Count Methodology. Prior to January 1, 2023, the participant count determines if an individual plan is required to have a separate plan-level audit by an independent qualified public accountant and was required with plans greater than 100 participants. The participant count will now only be based on those participants with balances, even if employees are eligible to participate and do not have a balance within the plan. Prior to January 1, 2023, employees eligible but without a balance were considered participants. Per the DOL, “this change is intended to reduce expenses for small plans and encourage more small employers to offer workplace retirement savings plans to their employees”. This change in participant count methodologies would mean that more small plans would be eligible for the conditional waiver of the annual audit of the plan.

Important to Note: For the initial year as a new plan, the participant count will be determined based on the last day of the initial plan year. All other plans in effect on the first day of the plan year will as always utilize the participant count on that same day for determination of audit requirements.

Another large change, and brand new to Form 5500, is Schedule DCG, for 2023 reporting periods. A Defined Contribution Group (DCG) is a collection of single-employer plans, which prior to 2023 were required to file separate Form 5500s to the appropriate regulatory agencies. In 2023, one Form 5500 + Schedule DCG is required under these groups to alleviate paperwork filing burdens that contain plan-level information only. Plan sponsors should take note that just because they are within a DCG, does not necessarily mean they are now waived from the audit requirement. Feel free to reach out to our team at Hauser Jones and Sas to help determine your filing requirements under this new form.

A brand-new reporting requirement for 2023 plan years for multiple employer plans (MEP) for Form 5500 is Schedule MEP. This schedule is designed to streamline and provide additional information directly related to a multiple-employer plan.

While this form is not new for 2023, Schedule H was expanded as part of the reporting requirements of 2023 Plan years, as it relates to administrative expenses to increase fee and expense transparency in employee benefit plans.

Fun fact: according to the Federal Register, the estimated reduction in filing costs is up to $95 million annually. The largest savings are being directly attributed to the reduced audit requirement by an independent certified public accountant, which if you recall from above, is based on participant counts of Employee Sponsored Plans.

Hauser Jones and Sas is ready to assist you with these significant Form 5500 changes and reporting requirements. July 2024 will be here before you know it, which is the when the filing of Form 5500 or Form 5500 SF is due. Reach out to our Employee Benefit Team to begin the discussion on your Company’s reporting requirements under the revised Form 5500 or Form 5500 SF.

Written by: Tiffany Paronteau, Audit Manager

Source: Fact Sheet: Changes for the 2023 Form 5500 and Form 5500-SF Annual Return/Reports (dol.gov)