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March 16, 2022

Terminated 401(k) Plan Audit Requirements

The economy in recent years has been hard on some businesses and in an effort to stay afloat longer, some companies are terminating their 401(k) plans to save money. However, this does not mean that those companies no longer need to have an audit for their 401(k) plans.

Until all of the 401(k) plan assets have been distributed, your business is still required to file Form 5500.

Although a plan may be terminated and does not receive contributions, the requirement rules for having an audit have not changed. The general rule is that a plan with 100 or more participants is required to have an annual audit.


The difference is the “eligible participants”.

* An active plans eligible participants include “all” eligible participants whether or not the employee has chosen to participate in the plan or not.

* Terminated plan count only include “eligible participants” who have an account balance remaining in the plan. A significant difference in “eligible plan participants” may mean be large enough to eliminate any need for an audit.

It’s important that you review the audit rules carefully in order to eliminate penalties or late filing fees. Hiring a CPA firm that specializes in 401(k) audits will make a difference in how smoothly your audit goes. Utilizing modern technology, it is possible to assist you entirely “off-site”, and with little or no distraction to your daily office routine.

Anders also offers 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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