Many plan sponsors understand the importance of EBP audits, but are unsure when an employee benefit plan audit is required—or what’s due when. That uncertainty is what often leads to rushed engagements and avoidable compliance risk.
If your plan is approaching key thresholds or you’re preparing for Form 5500, clarity now can save additional pressure later.
Key Takeaways
- EBP audits (employee benefit plan audits) are typically required when a plan has 100+ participants with account balances, not just total employees.
- The Form 5500 deadline and audit timeline are closely tied; missing them can lead to penalties or delays.
- Understanding the 80–120 rule and your participant count early helps avoid last-minute audit pressure.
Do You Need an EBP Audit for This Plan Year?
EBP audit requirements are generally triggered when a plan meets certain criteria, such as 100 or more participants with account balances on the first day of the plan year.
It’s important to understand that this count is not based on the total number of employees. It includes only participants with account balances, which may consist of:
- Active employees
- Former employees with balances
- Retirees with plan assets
As Bennie Lewis, CPA, President & Partner at Assurance Dimensions, says, “One of the most common issues we see is assuming the audit requirement is still based on total eligible employees, not participants with account balances. That misunderstanding can easily lead to filing issues if it’s not addressed early.”
Plans hovering near the threshold should also be aware of the 80–120 rule. This rule offers flexibility if your plan had between 80 and 120 participants and filed as either a small or large plan in the prior year.
This decision should be confirmed early in the process to avoid delays.
When Is an EBP Audit Due?
Filing requirements and extensions are overseen by the Internal Revenue Service and the U.S. Department of Labor. An employee benefit plan audit must be completed and attached to Form 5500, which means the audit timeline is directly tied to the filing deadline.
For most plans:
- Standard deadline: The last day of the seventh month after the plan year ends (typically July 31 for calendar-year plans).
- Extension option: File IRS Form 5558 to receive a one-time two-and-a-half-month extension, which moves the deadline to October 15.
Non-calendar-year plans follow the same rules, with deadlines calculated based on their plan year-end.
What If You’re Close to the Deadline—or Miss It?
Benefit plan audits shouldn’t be put off until the last minute. They require coordination with recordkeepers, custodians, and third-party administrators to ensure complete and accurate documentation.
Late or incomplete filings can result in:
- Financial penalties
- Increased Department of Labor scrutiny
- Operational disruption and rework
Even with an extension, tight timelines often compress audit quality and reduce flexibility. Early planning is key.
What Happens Once an Audit Is Required?
As Lewis puts it: “Most plan sponsors don’t struggle with understanding what an EBP audit is; they struggle with knowing when it applies to their plan. That uncertainty is what usually creates last-minute pressure.”
Once a plan requires an audit, plan sponsors must determine if:
- The plan participant count is near 100
- The plan recently crossed the threshold
- The 80–120 rule applies
- A limited-scope or full-scope audit is needed
Consulting with an experienced EBP auditor helps confirm requirements and prevent last-minute surprises.
How Assurance Dimensions Helps Plan Sponsors Prepare
ERISA audit requirements are driven by both participant counts and filing deadlines. Gaining understanding and partnering with an experienced benefit plan auditor helps plan sponsors avoid rushed filings, missed compliance steps, and audit delays.
At Assurance Dimensions, we help you confirm audit requirements and understand timing expectations tied to Form 5500 deadlines. We specialize in delivering efficient, well-managed EBP audits while providing ongoing support as plans grow.
If your plan is approaching key thresholds or preparing for Form 5500, reach out to Assurance Dimensions to get started on your audit preparation.