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401k Plan Audit Requirements Checklist

By Kyle Drost .

What Your Auditor Needs

Once a company meets the IRS requirements that trigger a 401k plan audit, there are steps that a company must take to prepare. After your company identifies an auditor, there are several standard items they will request including trust statements and reconciliations, payroll reports, and meeting minutes. During the audit, your auditor will request employee files and compensation support for a sample of participants. As part of the process, your auditor review any plan amendments were made to the plan during the past year.

As the plan sponsor, the company will have the fiduciary responsibility to act in the best interest of the 401k plan participants. Fiduciary responsibilities include ensuring the plan operates in accordance with the plan agreements, making sure plan expenses are reasonable, and holding regular meetings which cover topics such as investment performance.

As part of the 401k plan audit requirements, a number of items must be inspected. The following is a checklist to help ensure your auditor has the information needed to complete a 401k plan audit on behalf of your company. While not an all-inclusive checklist, by compiling the related documents below it will help to ensure a smooth audit process.

401k Plan Audit Checklist

  1. Plan documents:
    1. Adoption agreement and plan document
    2. IRS determination or opinion letter
    3. Summary plan description
    4. Amendments (if any)
    5. Agreements with custodians or third-party administrators
    6. Meeting minutes (investment committee and board of director)
    7. Evidence of fidelity bond coverage
  2. Annual Reporting Packages:
    1. Plan level reports summarizing activity for the year
    2. Schedule of investments by fund
    3. Schedules of contributions, rollovers, loans, hardship withdrawals, and distributions by participant
    4. Certification letter (if ERISA 103(a)(3)(C) audit elected)
    5. Internal control reports (SOC reports)
    6. Non-discrimination testing results
  3. Human Resources will be responsible for providing documentation for any employees selected for testing included:
    1. Evidence of birth, hire, and termination dates (if applicable)
    2. Authorized pay rates
    3. Year-end payroll reports
    4. Employee enrollment or deferral change forms, withdrawal request forms and/or loan request forms as applicable based on service provider processes/outsourced functions
  4. Financial statements:
    1. Statement of net assets available for benefits (two years)
    2. Statement of changes in net assets available for benefits (one year)
    3. Schedule of assets held at the end of the year and other supplemental schedules (as applicable)
    4. Draft Form 5500

If you need help completing your company’s 401k plan audit requirements, please contact Citrin Cooperman’s Employee Benefit Plan Audit Practice.

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