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February 25, 2015

Complete List of Documents Needed for a 401(k) Audit

If you’re preparing for your first mandatory 401(k) audit, you’re likely feeling a bit stressed. After all, the ever-growing list of your day-to-day tasks is plenty to handle. Now you’ve got to get ready for an independent CPA to examine the company’s 401(k) plan from top to bottom, checking for IRS and Department of Labor compliance issues, reporting concerns, and more.

Fortunately, the audit process is less stressful than you think. Finding a CPA with extensive 401(k) rules and audit experience will go a long way in making your experience relatively painless; someone familiar with the many 401(k)-specific rules and regulations can avoid costly and time-consuming errors, and help you complete the audit as quickly as possible. With today’s technology, some CPAs can even complete the audit entirely off-site, with no distraction to your office or workspace.

Even with a reputable CPA on the case, the 401(k) audit is going to require some effort on your part. For most plan administrators and sponsors, the most time-consuming (and sometimes frustrating) part of a 401(k) audit is the paperwork. Even the most organized of plan administrators may feel lost as they search for needed documents; still, it’s important that all requested documents be handed over to the CPA as soon as possible—the audit can’t begin without them.

Finding and organizing all of the documents you’ll need will provide you with a great starting point for a successful, on-time audit filing. The documents you need for your 401(k) audit will most likely include the following:

  • Executed plan documents (including executed amendments)
  • Current year census
  • List of all parties in interest
  • Copy of Form 5500 filed in previous year
  • Distribution forms
  • IRS determination letter
  • Participant statement and trust reports
  • Plan sponsor financial statements
  • Form W2s or other annual payroll registers
  • Loan documents for all participant loans
  • Certification report for the plan custodian
  • Discrimination tests
  • SAS 70 report
  • Form 1099 for distributions

Looking over the required paperwork can often provide plan administrators with a “reality check.” This is especially true of the plan documents. The plan document as well as amendments, should accurately describe how the plan “works”- think enrollment procedures, employee eligibility guidelines, rules pertaining to participant deferral deposits, and more.

While it’s completely expected that a company’s 401(k) plan may change from time to time so it’s important that these changes be documented and presented to all parties of interest, in the form of an amendment or updated plan document. If there’s a discrepancy between the plan documents and the way the plan is actually operating, ask your CPA for guidance. It may mean there’s a compliance issue that needs to be addressed.

Hiring a CPA firm that specializes in 401(k) auditing 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. At Anders CPAs + Advisors we also offer flat-fee pricing for 401(k) audits so there are no surprises when you receive your bill.

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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