DOL Offers Relief for Small Business Retirement Plans

The Department of Labor (DOL) has offered some relief for small and mid-sized business owners with 401(k) plans. Plans with 100 or more participants at the start of the year are required to file audited financial statements with the plan's Form 5500 (plans with fewer employees can file a Form 5500-SF without the financial statement). Under prior law, plans had to count both individuals with account balances and those who were eligible to contribute to the plan (even if those participants are not actually making contributions to the plan). As of January 1, 2023, employers will only be required to count plan participants with account balances when determining whether they cross the 100-participant threshold. This new rule will allow many plans to avoid the expense of preparing and filing audited financial statements with their Forms 5500. For more information on the rules governing defined contribution plans, visit Tax Facts Online. : Q 3714. Note: Q is updated.