401(k) Audit

401(k) AuditWhen you would like to understand more about a 401(k) audit, call the trusted team at PolicySmart®. As your business continues to grow and you have enough people who are eligible for your 401(k) plan, it’s a good idea to have an independent party audit your business’ retirement plan. If you are a larger company, this is likely not unfamiliar to you as it becomes a common occurrence. However, you may be wondering at what point the audit must occur. If you are a smaller company and have not gone through an audit before, you may want to know why it is necessary and what the process is like. 

So, what is an audit like?

In 1974, the Employee Retirement Income Security Act (ERISA) stated that audits were mandatory for companies with 401(k) plans so that workers would still have retirement plans in place when they retire. The purpose of an audit for your 401(k) plan is to ensure that you are complying with regulations and any requirements set out in the 401(k) plan. An audit is a crucial step for many businesses to take because you may be missing something in your plan such as your vendor fees are too high or realize that it is not in compliance with government regulations. This is not bad news, however, because once you determine that there is a problem, we can work to fix it so that there is minimal risk to your company and to your employees. 

At what point do I need to conduct an audit?

Not every company is required to conduct an audit. When you have a 401(k) plan, you need to conduct an audit once you have 100 eligible employee participants in your 401(k) plan. As long as you keep your eligible employee participants at or above this mark, you will routinely be audited. If it drops below this number, however, you will not be required to continue with audits. 

What occurs during an audit?

When you are going through the auditing process, you probably want to know what we will look at. Some of these things are:

  • Making sure that your vendor/advisor fees are competitive.
  • Going through your plan to determine that it is compliant.
  • Testing out certain transactions for verification that the compliance works. 
  • Looking through distributions and ensuring that things were paid out as they were supposed to be.
  • Reviewing whether you are maintaining your 401(k) records in the most efficient way possible. 

If you would like to see how PolicySmart® can help with your audits for 401(k)s, contact our team at (888) 873-1982 now.