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What is a SOC Report and Why Is It Important to My 401(k) Plan?

Many third-party providers such as record keepers, custodians or trustees will have something called a SOC Report which is a report on controls at a service organization relevant to user entities’ internal control over financial reporting.

SOC Reports are prepared to provide information related to the internal controls over specific portions of their internal operations.

WHAT DO SOC REPORTS INCLUDE?

Typically, the reports provide a description of the internal controls in place over functions such as:

  • New plan setup
  • Accuracy of participant transactions
  • IT controls (access security, program change, backup, daily maintenance)
  • Daily asset pricing, custody of assets
  • Reconciliations and various other controls specific to the responsibilities of the third-party provider

The report may also include information from an independent auditor on testing that was done on the performance of the controls over a specified period (usually one year). These reports are important for your 401(k) plan as they document the work completed by your service providers with regard to the accuracy, completeness, and timelines of those activities.

IS AN SOC REPORT PART OF A 401(k) PLAN AUDIT?

If your Plan requires an audit, your auditor will request a copy of relevant SOC Reports as part of their audit documentation request. They also provide valuable information to you as the Plan Sponsor regarding the controls they have in place to ensure your Plan transactions are completed accurately, completely, and timely.  Ask for a copy of the report, review it and ask questions if you have any concerns regarding the testing findings identified by the SOC auditor.

As the plan sponsor, when it’s time to audit your 401(k) plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Anders we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine.  We also offer flat-fee pricing so there are no surprises on your bill when the job is complete.

To get started, request a free 401(k) audit consultation below or contact the team at (314)-886-7913 to schedule an appointment.

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Our firm provides this information for general educational guidance only and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Podcasts posted by Anders CPAs + Advisors are not intended to be used and cannot be used by any individual or business, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Please note that some content may be generated using artificial intelligence and is intended for educational and informational purposes only. In no way does listening, reading, emailing or interacting on social media with our content establish a professional relationship.

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