Auditing Employee Benefit Plans. Josie Hammond

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the same plan, then the plan should be written accordingly. If benefits are to be offered under separate plans, it should be remembered that the reporting and filing requirements apply to each plan. Benefits do not stand-alone. They must be contained within a plan. The audit requirement, like the Form 5500 filing, is based on plan definition, with some exceptions, covered in the following exhibit under plan entities. Generally, only one plan at a time, pension or welfare, can be covered by a Form 5500. Proper reporting requires a complete understanding of the plan and benefit structure.

      The following 3 exhibits outline unique audit considerations by plan type, tax considerations in an employee benefit plan audit and provide a quick reference chart for Form 5500.

Exhibit 1-2 Unique audit considerations by plan type

Feature	Money purchase	Profit-sharing	401(k)	SIMPLE 401(k)	403(b)
Restrictions on adopting?	Generally, none.	Generally, none.	Generally, none.	Available only to employers with 100 or fewer employees earning $5,000 in previous year.	Limited to public schools, charitable organizations and churches
Can an employer maintain other qualified plans?	Yes.	Yes.	Yes.	No.	Yes.
Minimum age or service requirement?	Age 21, up to 2 years’ service may be imposed.	Age 21, up to 2 years’ service may be imposed.	Age 21, up to 2 years’ service may be imposed. No more than one year of service may be required for employee deferrals.	Same as 401(k).	Same as 401(k) for employer contributions. Universal availability for salary deferrals.
Vesting?	Yes. Graduated or cliff vesting allowed.	Yes. Graduated or cliff vesting allowed.	Yes. Employer contributions; graduated or cliff vesting allowed. Employee contributions are 100 percent vested.	100 percent immediate vesting.	Same as 401(k).
Annual contributions required?	Yes. Mandatory as set forth in the plan.	No discretionary.	No discretionary.	Yes, for SIMPLE feature. To qualify as a SIMPLE 401(k) and avoid the ADP testing, an employer contribution is required.	Same as 401(k).
Limit on deductible employer contributions?	Maximum 25 percent of compensation, up to Section 415 dollar limit: $56,000 for 2019, $55,000 for 2018, $54,000 for 2017, $53,000 for 2015 and 2016.	Same.	Same.	Limited to required matching or nonelective contributions.	Same generally, some attributes that allow for higher limits.
Top-heavy rules apply?	Yes.	Yes.	Yes.	No.	Yes to employer contributions.
Nondiscriminat ion rules apply?	Yes.	Yes.	Yes. Special rules apply to employee deferrals.	No.	Yes. To employer contributions.
Employee deferrals allowed?	No.	No.	Yes. Employee deferrals limited to lesser of 100 percent of compensation (net of deferrals).	Yes. Employee deferrals are limited.	Same as 401(k).
Limit on employee deferrals?	N/A	N/A	$19, 000 for 2019, $18,500 for 2018, $18,000 for 2015, 2016, and 2017.	$13,000 for 2019, $12,500 for 2015, 2016, 2017, and 2018.	Same as 401(k).
Permitted disparity allowed?	Yes.	Yes.	Yes.	No.	Yes. For employer contribution.
Minimum coverage rules apply?	Yes.	Yes.	Yes.	Yes.	Yes. For employer contribution.
Annual additional limit of IRC Sec. 415 apply?	Yes.	Yes.	Yes.	Yes.	Yes. For employer contribution.
Participant loans allowed?	Yes, if specified in plan document. Subject to IRS limitations.	Yes, if specified in plan document. Subject to IRS limitations.	Yes, if specified in plan document. Subject to IRS limitations.	Yes, if specified in plan document. Subject to IRS limitations.	Yes, if specified in plan document. Subject to IRS limitations.
Rollovers to other plans allowed?13	Yes.	Yes.	Yes.	Yes.	Yes.
Annual report (Form 5500 series) required?	Yes, unless one-participant/$250,000 exception is met.	Yes, unless one-participant/$250,000 exception is met.	Yes, unless one-participant/$250,000 exception is met.	Yes.	Yes.
Age 50+ Catch Up contribution permitted?	No.	No.	Yes, $6,000 for 2015 through 2019.	Yes, $3,000 for 2015 through 2019.	Yes. Same as 401(k).

Exhibit 1-3 Tax considerations in an employee benefit plan audit

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