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How Should I Conduct a 401(k) Plan Self-Audit?

Published by Kim Moore on Jun 3, 2021 6:00:00 AM

We have discussed in recent blog posts the importance of maintaining strong compliance with all the rules and regulations that govern 401(k) Plans. As the Plan Sponsor of a 401(k) Plan, you have a fiduciary responsibility to the Plan participants to ensure the 401(k) is administered properly and that the Plan remains compliant with all rules and regulations. We recommend Plan Administrators take a few minutes periodically to do a self-audit of the Plan procedures to ensure they remain compliant and they can correct any potential errors early to avoid a costly fine and penalties.

What should you consider in a self-audit?

  1. Begin by reviewing all of your copies of Plan Documents and governing documentation over the Plan and verify you have signed copies. Review the most current documents and ensure you understand all the provisions. Then verify all the procedures currently in place adhere to these provisions.401k plan self audit

  2. Examine the individuals that have plan-level access to the Plan and remove anyone that should no longer have access. Also, review the access levels and remove any access that is not strictly needed.

  3. Review the internal controls for your plan especially related to eligibility, distributions, and loans to ensure you have all the bases covered to prevent errors and/or fraud.

  4. Review your practice for disseminating key documents to Plan participants such as the Fee Disclosure and Summary Annual Report. Verify you have kept copies of these documents and that they have been disseminated per requirements.

  5. Verify your Plan Compliance Calendar is up-to-date and you are current on all the required tasks.

  6. Review the fidelity bond in place for the Plan. Make sure it is still in force and that it covers 10% of Plan assets.

  7. Review the Investment Lineup and performance. Consider making changes if you believe a better-diversified lineup would enhance the offering or if funds are underperforming their peers.

  8. Review fees charged to make sure they are reasonable compared to other Plans.

  9. Complete a review of all employees listed on the Plan Census. Make sure all employees are included and the demographic information is correct (birth date, hire date, termination date, etc.) for a sample of employees. Be sure that newly hired employees are included even if they are not yet eligible to participate in the Plan. Review for the designations Highly Compensated and Key. If you do not understand these items, check with your service provider and make sure you have designated these employees correctly.

  10. Ask some of your employees for their thoughts on the Plan. Are they aware of the Plan? Do they have complaints about the Plan? Is there something you help them better understand about the Plan?

  11. Reconcile the contributions to your payroll reports, bank statements, or company general ledger to identify missed deposits or potential differences. Follow-up with your service provider if you identify any unusual items.

Although this is a long list and may take some time to work through, it is a good investment of your time to ensure your Plan remains compliant.


Do you need an audit for your 401(k) Plan? Consider a specialized firm like Summit CPA Group. We can provide a quality benefits plan audit that is efficient and accurate. If you would like to discuss our 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.

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