On February 24, 2023, the Federal Register announced changes to the 2023 Form 5500. One significant change was in the method for determining which employee benefit plans will require an audit for 2023. Previously, the determination between a small plan (files Form 5500-SF and has no audit requirement) and a large plan (files Form 5500 and requires an audit by an independent qualified public accountant) was based on the number of participants eligible for the plan as of the first day of the plan year. Under the new guidance, the determination only includes participants (and beneficiaries) with balances as of the first day of the plan year. Due to this change, the Department of Labor estimates that approximately 19,442 fewer plans will require an audit for 2023.
To determine whether your employee benefit plan will require an audit for 2023, first determine the number of participants, including beneficiaries, who have a balance in the plan as of January 1, 2023 (or the first day of the plan year for non-calendar year plans). If this number is 100 participants or more, your plan will generally be considered a large plan, file Form 5500, and require an audit. If this number is fewer than 100 participants, your plan will generally be considered a small plan, file Form 5500-SF, and require no audit.
However, what’s referred to as the “80-120” rule is still effective. Therefore, if your count falls between 80 and 120 participants, you have the option to file the same form (5500-SF or 5500) as you filed for 2022.