If you’re responsible for your company’s 401(k) administration, you know the annual 401(k) audit can get a little stressful. The good news is there are steps you can take to make your audit pain-free.
Robert Puerto was recently featured in the Retire Right podcast where he shared his experience on how ensure you have a smooth audit. Some of the items discussed in the podcast are:
Are you required to have a 401k audit?
Not all plans require auditing. But when a company has 100 or more eligible participants, an audit is required.
What does an audit entail?
The Employee Retirement Income Security Act (ERISA) requires 401(k) plans be audited to make sure they’re being run properly.
The two main focuses are:
- Compliance—to verify the plan is operating in compliance with IRS regulations and Department of Labor (DOL) rules
- Financial reporting—to determine the accuracy of the financial information reported in the plans Form 5500 and its financial statements
How to prepare for an audit?
The more prepared your company is when an audit starts, the more seamless and stress-free the process will be. We recommend gathering and reviewing all plan-related documents, including:
- Executed plan documents (including executed amendments)
- Current year census
- Copy of Form 5500 filed in previous year
- Participant statement and trust reports
- Plan sponsor financial statements
- Form W2s or other annual payroll registers
- Loan documents for all participant loans
- Certification report for the plan custodian
- Discrimination tests
At Boris Benic and Associates, a big segment of our practice is the auditing of 401(k) plans, which Robert oversees. The plans we currently audit collectively have over 25,000 participants with all major service providers. As members of the AICPA’s Employee Benefit Plan Audit Quality Center, we maintain the highest quality assurance standards in performing audit and compliance services.
What can we deliver?
- An expedient and dedicated team of professionals with a keen eye for detail.
- Strong technical knowledge of Generally Accepted Auditing Standards (GAAP) and the Employee Retirement Income Security Act (ERISA) requirement.
- Experienced professionals who perform audits and prepare Form 5500 and other filings in a methodical and timely fashion.
- Constant communication with compensation and benefits professionals.
Tune in to Retire Right to learn easy steps to prepare for a pain-free audit. And remember, the auditing process will always go more smoothly if you have everything you need, and work with a CPA firm like ours that specializes in plan audits.