This Month’s Question:
Are You Prepared for a Plan Audit?
Why It Matters
For certain retirement plans, an independent audit is required as part of the plan's annual filing. Even if your plan is not currently subject to an audit, maintaining organized records and sound administrative practices can help support compliance and make future audits more efficient.
Preparing before an audit is needed is often far easier than trying to gather documentation after the fact.
Practical Ideas to Consider
✔ Know whether your plan may require an audit
Audit requirements generally depend on the number of eligible participants in your plan. Understanding where your plan stands can help you prepare appropriately.
✔ Maintain organized records
Keep plan documents, payroll records, participant notices, contribution reports, committee meeting notes, and service provider agreements in a central location.
✔ Review contribution timing
Employee salary deferrals should be deposited in accordance with applicable Department of Labor requirements. Reviewing your process periodically can help identify potential issues before they become larger concerns.
✔ Work with your service providers
Your recordkeeper, third-party administrator (TPA), advisor, and CPA can each play an important role in helping prepare for an audit and identifying areas that may need attention.
A Common Mistake We See
Many employers assume audit preparation begins when they receive notice that an audit is required. In reality, the most successful audits are the result of maintaining consistent documentation and administrative processes throughout the year.
A Simple Takeaway
Whether your plan requires an audit today or may require one in the future, good recordkeeping and proactive administration can help make the process significantly easier.
The Guardian 401(k) Advantage is a monthly newsletter that answers key questions and delivers practical ideas to help you make informed decisions, support your employees, and stay compliant.
