Recently, the Department of Labor released a notice related to changes to the Form 5500 for plan years beginning on or after January 1, 2023. One of these changes is a change in the participant-counting methodology. Per the DOL Fact Sheet regarding this change, “The counting methodology for defined contribution retirement plans will be based on the number of participants with account balances, rather than the current method that counts individuals who are eligible to participate even if they have not elected to participate and do not have an account in the plan.”  

The participant count as of the beginning of the year determines whether an audit is required for the plan year. Plans with over 100 participants require an audit. As a result of this change in how participants are counted, your plan may no longer require an audit. If your plan has low participation, we recommend you contact your recordkeeper or third-party administrator to review whether your plan requires an audit for 2023.  

This change is intended to reduce expenses for some smaller plans. For more information regarding the other changes implemented for the 2023 Form 5500’s please refer to the DOL Fact Sheet here: 

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/changes-for-the-2023-form-5500-and-form-5500-sf-annual-return-reports.pdf