Steps to Remain Compliant
It's that time of year as we approach the end of July, that recordkeepers are notifying their customers that they have gone beyond the magic 100 eligible participant count and now they need an audit of the Plan. This may be the first that you have even heard of the potential for a 401(k) Plan audit. If so, we recommend you take the following steps as quickly as possible to ensure you remain compliant with this important federal regulation:
- Work with your recordkeeper/service provider to ensure you have an extension of time filed for your Plan. It will be very difficult to get a first-time audit completed in a few weeks so the extension will give you and your auditor more time to successfully complete the audit and the Form 5500 filing.
- Begin your search for a qualified 401(k) Plan auditor. Look for firms that conduct many audits of this specific type. Ask about the number of 401(k) audits each firm conducts annually, what is the experience level in 401(k) audits by the team members, and what will the audit process look like? Firms that belong to the AICPA Employee Benefit Plan Audit Quality Center are provided specific tools and training on these types of audits and will work with you to make sure the audit is completed timely and accurately.
- Once you have selected an audit firm and completed the engagement process, work with them to ensure you provide all requested items completed and timely. Any delays in providing the requested information will put the ultimate timely completion in jeopardy.
- Don’t be afraid to ask questions and follow up regularly with your auditor. They will appreciate your engagement. Considerate and experienced auditors want to help you improve your Plan performance. They should be able to help explain the various regulations that relate to 401(k) Plans and help you understand how to apply them to your Plan.
- Put pressure if needed on your recordkeeper for important tasks to stay on the audit timeline. Your auditor will need information from the recordkeeper/TPA so make sure you stay on track of those requirements as well.
- Don’t forget to ultimately file Form 5500 with the audit report attached!
The first audit can seem daunting especially as there is a lot of information needed to complete the audit. However, working closely with your auditor can help make the process move as quickly as smoothly as possible. Also, don’t underestimate the importance of selecting a qualified auditor. Making the choice strictly by finding the lowest pricing offered, may end up costing you more in the end.
If you would like to discuss Summit CPA Group’s audit process in more detail or need an audit for the first time, give me a call at (866) 497-9761. We’re here to help you navigate the world of the 401(k) audit as proficiently as possible.