401k audit team of diverse business people looking at camera and smiling

 

Your 401k audit requires the work of multiple key players with different roles and responsibilities. It’s a team effort to ensure benefit plan audits are seamless, timely, and accurate. Let’s outline the service providers and how you will work with them for your next 401k audit.

 

Custodian

The custodian of a 401k plan has the legal obligation to act in the sole interest of the plan participants. The custodian will make fund decisions in the best interest of the plan participants without regard to the interests of the employer or plan sponsor.

 

Third-Party Administrator (TPA)

The 401k plan sponsor hires a TPA to run the day-to-day operations of the retirement plan. The TPA is responsible for calculating vested returns and filing reports to the DOL, IRS, and other government agencies. Overall, the TPA plays a critical role in a 401k audit, as they prepare the annual Form 5500 and have access to the required financial documents necessary for the audit.

 

Financial or Investment Advisor

Due to the complex nature of 401k plans, many companies employ a 401k advisor or financial advisor to help employers develop and maintain a 401k plan. Their role can involve several responsibilities, including:

  • Retirement plan design
  • Plan implementation and management
  • Oversee quarterly investment meetings
  • Provide 401k advice to plan participants
  • Assist with the annual employee benefit plan audit
  • Administrative support related to finances
  • Track regulatory and legislative updates that may affect the 401k audit

 

Recordkeeper

The recordkeeper is the most visible to provider participants. This role is primarily associated with enrolling participants and providing them access to their retirement assets. The role of the recordkeeper is to track the data required for the benefit plan audit (including contributions and earnings.) The recordkeeper also communicates data to the required parties.

 

Auditor

The Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code require employers and plan administrators to hire an outside audit firm for an independent 401k plan audit. The auditor will be in charge of administering your benefit plan audit and preparing audited financial statements of your plan. They should be experienced CPAs who have detailed processes to ensure your benefit plan audit is completed correctly and promptly.

 

Coordinate and Communicate During Your Audit

Once you have established that your benefit plan needs a Form 5500 audit, the audit team will need to work in sync with all key players of the 401k plan. Since the auditor must collect information from the plan’s service providers and ensure that it is accurate and detailed, this requires coordination and clear communication across all roles in the 401k plan audit. Failure to coordinate could lead to missed 401k plan audit deadlines and compliance penalties.

 

 

Hire A Trusted Audit Team For Your 401k Audit

A 401k audit is time-sensitive and has extensive requirements. Hire qualified, certified public accountants to help your benefit plan maintain compliance.

Do you have an upcoming employee benefit plan (EBP) audit? Our team at Assurance Dimensions can help. Contact us today to work with a CPA firm with an experienced team of benefit plan auditors.

“Assurance Dimensions” an independent member of the Crete Professionals Alliance, is the brand name under which Assurance Dimensions, LLC including its subsidiary McNamara and Associates, LLC (referred together as “AD LLC”) and AD Advisors, LLC (“AD Advisors”), provide professional services. AD LLC and AD Advisors practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations, and professional standards. AD LLC is a licensed independent CPA firm that provides attest services to its clients, and AD Advisors provide tax and business consulting services to their clients. AD Advisors, its subsidiary entities, and Crete Professionals Alliance are not licensed CPA firms. The entities falling under the Assurance Dimensions brand are independently owned and are not liable for the services provided by any other entity providing the services under the Assurance Dimensions brand. Our use of the terms “our firm” and “we” and “us” and terms of similar import, denote the alternative practice structure conducted by AD LLC and AD Advisors.