What are the most common 401(k) audit findings?

The most common 401(k) audit findings include: late deferral deposits (employee contributions not remitted to the plan within the DOL's required timeframe), incorrect eligible compensation calculations (using the wrong definition of compensation for deferrals or matches), missed eligible employees (not offering enrollment to all qualifying workers), incorrect employer matching contributions, loan administration errors, and failure to follow the plan document terms. Many of these can be corrected through the IRS Employee Plans Compliance Resolution System (EPCRS) if caught early.

How do I prepare for a 401(k) audit?

To prepare for a 401(k) audit: (1) confirm your recordkeeper can provide auditor-level access to plan data, (2) gather your current plan document and any amendments, (3) prepare a payroll file showing employee contributions, employer matches, and eligible compensation for the plan year, (4) compile records of any plan corrections made during the year, and (5) document any hardship distributions, loans, or rollovers. Modern audit firms with automated technology can pull most of this data directly from your recordkeeper, significantly reducing your preparation burden.

What is the difference between a limited scope and full scope 401(k) audit?

A limited-scope audit (ERISA Section 103(a)(3)(C)) allows the auditor to rely on the plan custodian's certification for investment information, reducing the testing required. This is the most common and least expensive type of 401(k) audit. A full-scope audit requires the auditor to independently verify all investment information and is only needed when the custodian cannot or will not provide certification. Most 401(k) plans qualify for the limited-scope audit, which is faster and more cost-effective.

Can I change 401(k) auditors mid-year?

Yes, you can change 401(k) auditors at any time, even mid-engagement. The new auditor will need to obtain a predecessor auditor letter and may need to re-perform some work. The best time to switch is after the current year's audit is filed and before the next plan year begins. Common reasons to switch include excessive costs, slow turnaround, lack of specialization in retirement plans, or wanting a firm that uses modern automated technology to reduce your time commitment.

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Q: What happens if my 401(k) audit finds errors?

If your 401(k) audit uncovers errors, you have several correction options. The IRS Employee Plans Compliance Resolution System (EPCRS) provides three programs: Self-Correction (SCP) for insignificant errors, Voluntary Correction (VCP) for significant errors found before audit, and Audit Closing Agreement (Audit CAP) for errors found during IRS examination. Common corrections include making participants whole for missed deferrals, correcting late deposits with lost earnings, and amending plan documents. Early detection through a thorough audit prevents penalties that can include plan disqualification.

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Our remote auditing technology to streamlines the entire 401(k) Audit report service process. Our certified 401(k) audit CPAs have the unique ability to shorten the audit timeline so that you can file a timely, error-free audit with minimal disruption to your staff and also operations. Because our 401(k) audit report services are automated and also performed remotely, clients need to provide minimal support to receive a fully compliant, error-free audit in less than three weeks.

401(k) Audits

Not all 401(k) audit are created equal.

With Autire, we have revolutionized the entire auditing experience to make it easier and also faster for plan sponsors to meet their obligations and avoid thousands of dollars in daily penalties that can be assessed. Using our custom-built remote auditing technology, our certified 401(k) CPAs in Texas can deliver a better audit for half the traditional cost. Whether this is your first audit or 30th, PriceKubecka is one of the best 401(k) audit firms in Texas that can help your company remain ERISA compliant as required by the IRS and also Department of Labor.

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Frequently Asked Questions

What is an ERISA 103(a)(3)(C) audit?

An ERISA Section 103(a)(3)(C) audit, also called a limited-scope audit, is the most common type of 401(k) plan audit. It allows the auditor to rely on the certification from the plan’s custodian for investment information, reducing the scope of testing. This makes the audit faster and less expensive while still meeting DOL filing requirements.

What records do I need for a 401(k) audit?

PriceKubecka’s automated technology minimizes your documentation burden. You’ll need to provide auditor access to your recordkeeper’s website and schedule a 30-minute meeting to create a customized payroll file. Our system pulls most required data directly from your recordkeeper and payroll provider.

What happens if my 401(k) audit finds errors?

Common errors include incorrect eligible compensation calculations, late deferral deposits, and miscalculated employer matches. PriceKubecka helps you identify and correct these issues, often through the IRS Employee Plans Compliance Resolution System (EPCRS). Early detection can prevent costly penalties and plan disqualification.

Do all 401(k) plans need to be audited?

No. Only 401(k) plans with 100 or more eligible participants with account balances at the beginning of the plan year are required to have an audit. The 80/120 Rule allows plans that had between 80 and 120 participants to continue filing as a small plan without an audit.

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If you have any questions or need assistance from a 401(k) audit firm in Texas during this time, please feel free to reach out to us. We are open and also here to answer your questions.

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401(k) Audit Services — Comprehensive, Remote, Affordable

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401(k) Audits

Frequently Asked Questions

What is an ERISA 103(a)(3)(C) audit?

What records do I need for a 401(k) audit?

What happens if my 401(k) audit finds errors?

Do all 401(k) plans need to be audited?

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