In the first part of any Plan year, your record-keeper will routinely ask you to prepare or review something called a Plan Census. This document will contain information for each employee of the company including:
- Employee name
- Employee date of birth
- The employee's date of hire
- Employee termination date (if applicable)
- Employee hours worked
- Any compensation and amounts contributed to the 401(k) Plan during the year.
The specific provider may also request additional information depending on the nature of your Plan provisions. The data is compiled based on the year-end information from the prior year. This data is used by the provider to complete the annual discrimination testing required by the Internal Revenue Service and Department of Labor standards. The testing is very important to ensure the Plan remains qualified. To ensure the accuracy of the Plan Census, Plan Administrators can complete reconciliation of the compensation amounts to the year-end payroll data that includes:
- The review of random employee data and compare to the employee Human Resources file to ensure accuracy.
- The examination of the overall data for inconsistencies such as:
- Employees that remain active with the company but have no compensation.
- Employees with participant 401(k) contributions but no related employer match contributions.
When it’s time for your retirement plan audit, it’s essential to hire a CPA firm that specializes in 401(k) auditing to ensure that the process goes smoothly and accurately. At Summit CPA we offer multiple resources and technology to assist you entirely “off-site”, and with little or no distraction to your daily office routine. We also offer flat-fee pricing for 401(k) audits so there are no surprises when you receive your bill. To find out how we can assist your business, contact our office at (866) 497-9761 to schedule an appointment.