401(K) Audit Services
Increased investments enable us to deliver updated technology for better 401(K) audit services on a limited scale with minimum pricing.
It differs from case to case. A limited scope audit does not require that investment details be tested by the auditor. The custodian keeping the properties attests to this information’s quality and completeness, removing the need for an auditor to test it. If a certification cannot be obtained from a reputable entity (bank, trust, or insurance company), it is important to carry out a full scope audit.
Call our office to find out whether you need a limited scope or full scope audit.
Employers with 100 or more workers who are registered at the beginning of a year to participate in a 401(k) plan are expected to have their plan audited. As per DOL, an employee benefit plan is categorized as a “Large Plan” in any year when it has over 100 eligible participants as of the beginning of the year.
For calendar year plans, Form 5500 with the attached audit report is necessary to be submitted by July 31. You can request a one-time extension if necessary by filing Form 5558. This extends the deadline to 15 October.
We will share with you a PBC list (request list) at the beginning of the audit. You can also grant us “Auditor access” to the record keeper’s website which will allow us to pull the plan documents, annual reporting documents and payroll data independently. Your overall time commitment will be around 6hrs to support the audit.
The following are the exceptions to audit requirements:
Short Plan Years: Even when the plan is classified as a large plan due to its size, if a 401(k) has a plan year lasting seven months or less (for example, if it started in August and is a calendar year plan), the audit can be deferred to the next plan year. If participation significantly drops the next year, and no audit is required, the short plan year will still have to be audited.
The 80/120 Participant Rule: If the eligible employee count is 121 or greater at the beginning of a year, the plan must be audited. However, if the count is anywhere between 80 and 120, that year’s requirement follows the prior year’s audit requirement. For example, if in year 1, there were only 90 eligible participants, no audit was required. In year 2, eligible participants climbed to 115. While the plan was above the 100 eligible participants, because it was still less than 120, it could elect to file as a small plan again. In year 3, when eligible participants rose above 121, the plan will be required to have an audit.
Audits typically take 3 weeks after we get access to Plan’s data.