Employee Benefit Plan and 401(k) Audit Services

A benefit plan audit is the one engagement where the auditor's inexperience becomes the sponsor's liability.

The Department of Labor has studied audit quality in this area repeatedly and found deficiency rates that concentrate heavily among firms performing very few plan audits a year. When an audit is deficient, the filing can be rejected, and the penalties attach to the plan sponsor, not the firm that did the work. The fiduciary who selected that auditor is the one holding the exposure.

We are a 401(k) audit firm that performs benefit plan audits at volume, and our firm holds membership in the AICPA Employee Benefit Plan Audit Quality Center. That combination is the single factor most associated with audit quality in this space, and it is why our plan clients file on time without extensions in most years.

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Plans We Audit

401(k) plans. The majority of our plan work is across single employer plans, multiple employer plans, and pooled employer plans.

403(b) plans. For nonprofits, healthcare organizations, and educational institutions, including the legacy contract issues that complicate these plans.

Defined benefit pension plans. Including frozen plans and plans in termination. A pension plan audit follows the same funding-based scrutiny as a 401(k) audit, with its own actuarial layer on top.

Health and welfare plans. Where a filing requirement applies.

Employee stock ownership plans. Including the valuation coordination these require.

Plans with SEC 11-K filing requirements.

Whatever the plan type, this is retirement plan audit work: the Form 5500 audit attached to your filing, performed by a team that does this every year for over 30 companies.

We work with plan sponsors directly and with third party administrators, recordkeepers, and advisors who need an audit firm for their client base.

Do You Actually Need an Audit?

This is a question worth confirming before you scope an audit, because the answer has recently changed.

The requirement is generally triggered by participant count at the beginning of the plan year. The counting method was revised in recent guidance: it is now based on participants with account balances rather than all eligible participants. That change moved a meaningful number of plans below the threshold. Some sponsors are still paying for audits they no longer need, and some crossed the line without noticing.

Send us your most recent Form 5500 and participant counts. Confirming this takes very little time and occasionally saves a client the entire cost of an engagement.

What Gets Tested

Plan audits examine a defined set of areas, and the findings tend to repeat across the industry.

Participant eligibility and enrollment. Whether employees were enrolled when they became eligible, and whether the definition in the plan document was applied as written. Auto enrollment provisions add complexity here.

Contributions. Whether deferrals were withheld correctly, whether the compensation definition in the plan document was used, and whether employer match and profit sharing were calculated correctly. The compensation definition is the single most common source of findings, because payroll systems frequently include or exclude items the plan document treats differently.

Timeliness of deposits. Deferrals must be remitted as soon as administratively feasible. Late deposits are a prohibited transaction requiring correction and disclosure, and they are among the most frequent findings we see.

Distributions. Whether distributions were properly authorized, calculated, and documented, including hardship withdrawals and required minimum distributions.

Participant data. Accuracy of the census information driving every calculation above.

Plan document compliance. Whether operations match the document, including whether required amendments were adopted on time. This is the core of 401(k) compliance, and it's where a plan sponsor's exposure actually lives.

Investments and net assets. Valuation and reconciliation to the trust statement.

Full Scope and Limited Scope

Where a qualifying institution certifies the investment information, the audit can exclude testing of certified investments. Under the current standard this is referred to as an ERISA Section 103(a)(3)(C) audit rather than a limited scope audit, and it is no longer treated as a disclaimer of opinion.

Practically, the certification narrows the investment testing but does not reduce the work on eligibility, contributions, distributions, or participant data, which is where findings actually arise. Sponsors sometimes expect a larger fee difference than the change in scope supports.

Fiduciary Responsibility Beyond the Audit

The audit is one obligation. The broader fiduciary duty is ongoing, and the Department of Labor has been active on several fronts.

Service provider selection and monitoring. Fiduciaries are responsible for prudently selecting and monitoring recordkeepers, TPAs, and advisors, and for documenting that process. Fee reasonableness is part of it.

Cybersecurity. The DOL published cybersecurity guidance covering program best practices, hiring service providers, and online security, and it has asked about them during investigations. Participant data sits with your providers, and the duty of prudence extends to how you evaluated them. We assess sponsors against those expectations and help build the documentation a defense rests on.

Committee governance. Whether a committee exists, meets, keeps minutes, and records the basis for decisions. Most sponsors are making reasonable decisions and failing to document them.

Correction programs. When an operational failure is found, the IRS and DOL correction programs generally produce a far better outcome than waiting to be examined. Self correction is usually available and considerably cheaper.

Meeting the Form 5500 Deadline

The Form 5500 is due seven months after plan year end, with an extension available. The audit report attaches to the filing, so the audit drives the date.

We schedule plan audits across the year rather than compressing them into the summer, which is how firms end up extending. Calendar year plans that engage us by spring generally file without an extension. If you are already late, or your prior auditor has fallen behind, tell us the current status and we will be honest about what is achievable.

How much does a 401(k) audit cost?

It depends on participant count, payroll complexity, number of locations and payroll systems, and whether investments are certified. We quote a fixed fee after reviewing the prior year filing.

What do you need from us to get started?

The signed plan document and all amendments, the recordkeeper package and trust statements, payroll registers for the year, the participant census, distribution documentation, and the prior year Form 5500 and audit report.

Our current auditor has been fine. Why should I switch?

If they perform only a few plan audits a year, that's worth a closer look. It's the factor most correlated with deficiency, according to the DOL's own studies.