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Monitoring Controls for a 401(k) Plan

Published by Kim Moore on Mar 5, 2020 6:00:00 AM

It is very important to maintain strong internal control over your 401(k) Plan.  One area that you need to focus your attention on relates to monitoring of activity within your Plan to ensure all transactions are recorded accurately, timely and completely.  Even though you may use outside third party service providers to conduct the daily transactions related to the Plan such as contributions, withdrawals and participant loans, it is still the responsibility of the Plan Sponsor to ensure all Plan activity is accurate.  We recommend you:

  • Review periodically the participant loan account to ensure loan repayments are occurring on all loans.

  • Approve distribution activity to ensure it was authorized by a participant and that the payment amounts are accurate.
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  • Reconcile contribution amounts to payroll reports to ensure all amounts are included and recorded to the appropriate participants.

  • Set up a Plan or Investment Committee to review the investment selection and ensure it remains diversified and investment performance is consistent with the Plan investment strategies and related benchmarks and that the fees charged are as low as possible.

  • Set up a Compliance Calendar to ensure you are completing all required items when needed. Assign responsibilities for each task to ensure accountability. 

  • Review all correspondence regarding your Plan on a timely basis. This can include letters from the IRS or Department of Labor inquiring about the Plan, e-mails from your service provider regarding needed actions or phone calls from your Investment Advisor regarding underperforming investments, as examples.

  • Schedule periodic review sessions to evaluate service provider performance. If concerns are identified, review alternatives.  Review the SOC reports related to your service providers to ensure the controls in these companies are adequate to ensure accurate and complete processing of your Plan transactions.

  • Review those with administrative access to your Plan regularly. If an individual that is involved with the Plan such as a Plan Trustee, Plan Administrator, or payroll, or human resources specialist changes positions within the Company or leaves, make sure their access is removed immediately to prevent errors or fraudulent transactions.

    Do you need an audit for your Plan? Consider a specialized firm like Summit CPA Group. We have the ability to provide a quality benefit plan audit that is efficient and accurate.  If you would like to discuss Summit CPA Group’s audit process in more detail contact our office at (866) 497-9761. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete.


    Get a FREE  401k Audit Consultation

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