The hands of a team reviewing financial documents that are part of 403b plan audits


Navigating 403b audits can be frustrating and confusing if you’re not working with a trusted firm that offers financial accounting and advisory services. For non-profit and charitable organizations managing 403(b) retirement plans, staying compliant with ERISA is crucial. However, many organizations struggle with common challenges during the audit process.

Before you begin your audit engagement, it’s important to understand what is required during 403b audits, who is involved, and the common pitfalls organizations can fall into during this critical compliance check.


403(b) Plans: An Overview

Since 2009, employers that offer 403(b) retirement savings plans have been required to file Form 5500 with the Department of Labor (DOL) and undergo annual audits like their 401k plan counterparts. In many ways, these plans are very similar. 403(b) retirement plans are set up by certain non-profit employers in fields like education, healthcare, and other tax-exempt organizations.  They allow employees to contribute part of their income to a retirement plan, typically through salary deferrals.

Some types of 403(b) retirement plans, such as government-sponsored and church 403(b) plans, are exempt from ERISA. But, for the purposes of audit preparation, we’re focusing on the plans that require ERISA compliance through an audit.

These organizations:

  • Have 100+ participant balances in the 403(b) plan
  • Are considered to have a large plan
  • Require a 5500 and Schedule H
  • Require an independent benefit plan audit 


3 Common Challenges for 403b Audits

Plan sponsors of 403(b) retirement plans often face similar challenges during the audit process. These include:

1. Lack of Internal Controls

When proper internal controls aren’t in place, it can be difficult to track and report plan contributions and distributions accurately. Mistakes in this area can lead to errors or discrepancies that may raise red flags during an audit.

How can organizations address this challenge before 403b audits begin?

Implement strong internal controls, such as separating duties for plan transactions and regularly reviewing records. 

2) Failure to Enroll Eligible Participants

One of the most fundamental aspects of a 403(b) plan is who is allowed to participate. Eligible participants should be clearly informed about their opportunity to contribute. However, without a good onboarding process or eligibility tracking system, organizations may accidentally overlook eligible participants. Failing to enroll eligible participants can lead to penalties and compliance issues.

Tips to Avoid Overlooking Eligible Employees

  • Conduct regular reviews of employee eligibility.
  • Enroll eligible employees in the 403(b) plan as part of a new hire onboarding process.
  • Provide thorough employee training and representation of the plan’s benefits.
  • Establish detailed registration procedures.

3) Meeting Deadlines

403b audits have strict deadlines for submitting required documents and reports. Missing these deadlines can result in penalties, fines, and other negative consequences for an organization. To avoid this challenge, organizations should have a clear understanding of all the documentation requirements and create a detailed schedule to ensure everything is completed on time.

Strategies to Stay On-Track

  • Work with a trusted CPA firm specializing in 403b audits to keep you on track.
  • Create an annual calendar of essential IRS and DOL deadlines.
  • Implement a notification system for all deadlines.
  • Develop a contingency plan for any unplanned delays or bottlenecks in the process.


403b Audits Made Easier with a Trusted Partner

Don’t settle for just any audit firm regarding your 403b audit—partner with a team with experience and expertise in navigating the complexities of ERISA regulations and 403(b) plans. At Assurance Dimensions, we aim to help you successfully manage your 403(b) plan with a low-stress, well-planned, and timely benefit plan audit that meets all regulatory requirements.

Contact us if you have any questions about 403(b) plans, benefit plan audits, or compliance. Learn more about our employee benefit plan audit services.


A group of employees at an organization meeting to discuss future 403b audits