Audit rule will put some PEPs out to pasture

It looked great on paper, Pooled Employer Plans (PEPs) needed an audit only if they hit 1,000 participants or if they had an adopting employer with 100 or more participants. The Internal Revenue Service and Department of Labor clarified that PEPs with 100 participants or more are subject to audit, rather than the 1,000-participant threshold that we thought was the interpretation in the SECURE Act., which first made PEPs a retirement plan option. Instead, regulators kept the audit rule of having 100 or more participants the same for PEPs as they do for single-employer retirement plans.

What does that mean? It means PEPs with a small amount of participants that counted on no audit, may have to shutter their doors because a $10,000 to $20,000 audit can’t work for them. Will see in 2024, where it goes.

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