The Employee Retirement Income Security Act of 1974 (“ERISA”) requires employee benefit plans with 120 or more eligible participants as of the first day of the plan year to undergo an annual independent audit. Once an audit has occurred, the 401(k) plan must be audited every year until the eligible participant count drops below 100.
An eligible participant is anyone who is an employee of the company who meets both the statutory IRS requirements and the requirements of the company’s 401(k) plan agreement at the beginning of the year. Even if they decide not to participate in the plan, these individuals are still considered eligible participants. Terminated employees who have balances in the 401(k) plan on the first day of the plan year are also included.
The audit and required filings are due seven months after the end of the plan year. An extension can be filed to extend the deadline by two and a half months. For example, if your 401(k) plan ends December 31st, the audit would need to be completed by July 31st of the following year. If an extension is filed, the deadline would then move to October 15th of the following year.
If your 401(k) plan requires an audit the time to seek a qualified independent auditor is now.
Vrakas is proud to audit over 110 employee benefit plans annually. Our team’s emphasis is to ensure your plan is being served by qualified professional who not only can provide the compliance audit services that you require, but can also provide best practice suggestions and communication of audit results that go beyond the standard auditors’ report.