A Top Auditor’s 401(k) Audit Document Checklist

What should be included in your 401(k) plan audit document checklist? When anticipating your first audit, it’s hard to know what to expect. While each audit firm’s procedures are different, and regulatory requirements differ based on the type of plan and transactions involved, the information below can serve as a general guide for what information you’ll have to provide for a 401(k) plan audit.

How can you know what documents to keep and which can be safely discarded? Your plan’s document retention policy should guide you.

Plan Documents

These documents should be available for all plan years and should be the signed, executed versions.

  • Basic Plan Document
  • Adoption Agreement
  • Summary Plan Description
  • Summary of Material Modifications (if applicable)
  • IRS Opinion/Determination Letter
  • Fund Agreements
  • Annuity, Common Collective Trust and/or Stable Value Contracts

Service Agreements 

Your plan’s agreements with various service providers.

  • Record keeping Agreement
  • Custodial Agreement
  • Investment Advisory Agreement
  • Banking Agreement (if applicable)
  • Insurance Policy (if applicable)
  • Service Agreements over functions such as electronic distribution of documents
  • SOC Reports from various providers (Payroll Company, Record-keeper and Custodian) including IT support for all areas.

Compliance Items Related to the Plan

  • Current and Prior Year Discrimination Testing
  • Documentation related to correction of Plan testing failures
  • Current and Prior Year Plan Census
  • Current and Prior Year Form 5500
  • Current Year Plan Disclosures and documentation of how and when they were distributed
  • Copies of 1099-R’s issued for the Plan participants or a report showing this information
  • Fidelity bond copy
  • Related Party and Party-in-interest Listings and description of transactions involving these parties.

Internal Control Information

Include detailed descriptions of procedures utilized for the plan including:

  • Enrollment
  • Contributions
  • Distributions and Loans
  • Plan level access (administrative access)
  • Higher level review of the Plan (monitoring of Plan activity)
  • Payroll processes and setup of new employees
  • Payroll processes and setup of a new loan for the participant
  • Payroll processed and termination procedures

Payroll Information

  • Year-end payroll reports
  • Specific pay period reports for sample items
  • W-2 Copies for Sample items

Plan Year-end Financial Information

  • Trust Report
  • Activity Reports such as Contribution, Distribution, Fee and Loan reporting
  • Schedule of Assets
  • Custodial Certification
  • Custodial Statements (if applicable)
  • Bank Statements
  • Insurance Policy year-end information
  • Participant Statement Copies or a report providing information on participant accounts showing the investment information and sub-account information (pre-tax account, rollover account, employer accounts, etc. for each participant).

Testing Information

  • I-9 Forms
  • Enrollment and Deferral Change Forms
  • Decline of Enrollment Forms (if applicable)
  • Distribution requests or a report showing this information
  • Loan requests or a report showing this information
  • Promissory note copies and amortization schedules
  • Check copies or a report showing the distribution or loan issuance
  • Reports showing investment selections made by a participant
  • Rollover supporting documentation

Close out Procedures

  • Management Representation Letter
  • Attorney Representation Letter (if applicable)
  • Review of Financial Statements and Disclosures
  • Discussion with the auditor regarding any issues noted during the year

    While this is not meant to be a complete listing of all the information that will be needed for a 401(k) Plan audit, we do believe it can be used as a checklist to prepare for an upcoming audit. It is also a good list to use for retention policy purposes.

    As an audit may not be needed for the current plan year, it may be required in the future. Auditors are required to verify beginning balances in all first audits. This will require reviewing prior year information. In those cases, the above information will be needed for years before the year being audited. For that reason, we encourage developing a document retention policy for your 401(k) plan that reviews all of the above information.

    This will ensure that if and when an audit is required, you will be able to provide the auditor with the necessary information quickly and without significant administrative time on your end to locate the needed documents.

    When it’s time for your plan’s audit, it’s vital that you hire a trusted auditor. 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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