The Department of Labor (DOL) requires that retirement plans (401K, 403b, ESOP plans etc.) with 100 or more participants with account balances at the beginning of the plan year have an audit. However, small plan sponsors can still benefit from an annual plan checkup to help ensure they are meeting their fiduciary responsibilities and steering clear of costly mistakes.
What is a retirement plan audit?
A retirement plan audit is a financial statement audit for the plan that also consists of compliance procedures. The Plan document and adoption agreement provisions govern plan operations, and the audit examines compliance with those provisions. An audit will examine provisions such as the following (not all inclusive):
- Eligibility – were employees offered enrollment into the plan based on the correct age and service requirements.
- Eligible Compensation – were employee deferrals and/or employer contributions calculated using the correction compensation base
- Timeliness of contribution remittances – did the plan sponsor remit employee contributions to the plan timely.
- Distributions –did the participant qualify for the distribution and was the amount of the distribution correct
At the end of an audit, the Plan sponsor will receive audited financial statements as well as a communication that describes any compliance errors or internal control findings in the plan. The audited financial statements are required to be attached to the Plan’s Form 5500 filing with the DOL.
What if my Plan doesn’t require an audit?
Although your plan may not require an audit, Wegner CPAs does offer consulting services for retirement plans. Even the smallest of plans can benefit from an annual checkup. A checkup might a good idea for a year in which the plan sponsor has made changes to the plan or has had a personnel change over plan administration.
A plan check-up is geared toward peace of mind. Therefore, our checkups consist of examining compliance with plan provisions in areas that are most likely to have errors. Our checkup can be al a carte or you can elect to have us examine all procedures in our menu. Our procedures can be mixed and matched to your liking, or completely customized to your Plan. A checkup could include examining items such as: non- discrimination testing results, timeliness of contribution remittances, eligible compensation, distributions, eligibility, ERISA bond coverage, and/or administrative processes and procedures/internal controls.
At the end of a checkup, the Plan sponsor will receive a report detailing all of our compliance procedures and results, as well as other best practices applicable to the Plan. The report is for Plan management use only. If compliance errors are identified Wegner can provide guidance on error correction.
We’re here to help.
The Wegner CPAs retirement plan advisors are here to help you navigate employee benefit plan compliance, and they can offer a recommendation for which service level is the best fit for your organization. Our retirement plan advisors receive over 20 hours of continuing education annually, focused only on retirement plans led by nationally recognized experts. Our leadership team has a combined 40 years of experience. Please contact Kristine Boerboom, ERISA Partner at Kristine.boerboom@wegnercpas.com or Erin Ezdon, Manger, ERISA Niche at erin.ezdon@wegnercpas.com for more information on our services.
