ERISA Audits – Kentucky (KY)
Belfint Lyons & Shuman serves employers in Kentucky with their 401(k) plan audit needs. The reporting and other requirements imposed by the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act (ERISA) are complex and regularly changing. Careful consideration needs to be exercised to ensure plan operations are following plan provisions, legislative requirements, and participant elections. In other words, a retirement plan audit is a specialty audit that requires more than foundational knowledge of basic accounting and auditing principles.
Kentucky ERISA Audit Experience
We have significant experience serving the various types of retirement plans offered by Kentucky employers. This includes defined contribution, defined benefit, health and welfare, and more. The DOL places so much importance on finding the right plan auditor they produced, Selecting An Auditor for Your Employee Benefit Plan. As you will see when reviewing it, our firm meets the criteria for an experienced auditor who can guide your team through the process.
Kentucky 401(k) Audit Services:
- Comprehensive audit services, including testing participant account balances to verify
their accuracy and completeness - Operational consulting regarding participant and employer contributions, benefit payments,
and loan processing - Form 5500 preparation and review
- ERISA and DOL reporting requirements
- Plan design options information and recommendations
- Plan correction assistance
Contact Our Kentucky 401(k) Audit Team
Belfint, Lyons & Shuman provides benefit plan audit services to companies in Kentucky remotely from our Delaware headquarters. Please complete the form below and a member of our team will follow up with you.
401k Plan Audit – Frequently Asked Questions
A 401(k) plan audit is an independent examination of a retirement plan’s financial reporting and operations, performed by a qualified Certified Public Accountant. The goal of the audit is to determine whether the plan is being operated in accordance with its terms and with the requirements of the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. The audit also ensures that the plan’s financial statements are presented fairly and accurately.
A 401(k) plan audit is typically required when a plan is categorized as a “large plan,” meaning it has 100 or more eligible participants at the beginning of the plan year. The Department of Labor uses this participant count to determine whether a Form 5500 filing must include an independent auditor’s report. However, there is an exception called the 80-120 rule, which allows plans with between 80 and 120 active participants with account balances to continue filing in the same category as the previous year.
The 80-120 participant rule is a provision that allows plans with 80 to 120 active participants with account balances at the beginning of the plan year to maintain their prior year’s filing status. For instance, if a plan filed as a small plan last year and has not exceeded 120 active participants with account balances, it may continue to file as a small plan, thereby avoiding the audit requirement for that year.
A 401(k) plan audit involves a review of the plan’s financial records, internal controls, and operational compliance with plan documents and applicable regulations. The auditor will examine payroll records, participant data, plan contributions, distributions, loans, and investments. They will also assess whether the plan is being administered in accordance with its governing documents and ERISA requirements. The audit culminates in an auditor’s opinion, which is filed with Form 5500.
Only an independent auditor who is licensed and in good standing as a Certified Public Accountant can perform a 401(k) plan audit. It is important to work with a CPA firm that has experience and specialized knowledge in auditing employee benefit plans. Firms like Belfint, Lyons & Shuman, for example, are known for their deep expertise in ERISA audits and are members of the AICPA Employee Benefit Plan Audit Quality Center.
An ERISA 103(a)(3)(C) audit is permitted when a qualified institution, such as a bank or insurance company, certifies the accuracy and completeness of investment information. In a 103(a)(3)(C) audit, the auditor is not required to perform auditing procedures on the certified investment information. In contrast, a non-103(a)(3)(C) audit requires the auditor to examine all aspects of the plan, including the investments. 103(a)(3)(C) audit are more common but may transition to non-103(a)(3)(C) audit depending on regulatory changes.
Preparation for a 401(k) plan audit begins with ensuring that all plan documentation, such as the plan document, summary plan descriptions, and amendments, is complete and up to date. Employers should also maintain accurate records of participant data, payroll information, contributions, distributions, and loans. Coordination with the plan’s third-party administrator and recordkeeper is critical, as much of the required data will be sourced from these service providers. Having a designated internal point of contact for the auditor can also help streamline communication and response times.
Yes, beginning with the 2023 plan year, the Department of Labor clarified that only participants with account balances at the beginning of the year should be counted toward the 100-participant threshold for audit purposes. This change may reduce the number of plans that are subject to the audit requirement. Employers should carefully review their participant data and consult with experienced benefit plan auditors to determine whether an audit is required under the updated guidance.
Engaging an experienced and specialized audit firm such as Belfint, Lyons & Shuman provides assurance that the audit will meet high standards of quality and compliance. Firms with deep knowledge of employee benefit plan audits are more adept at identifying potential issues, guiding plan sponsors through complex compliance requirements, and completing audits efficiently and accurately. Belfint is also a member of the AICPA Employee Benefit Plan Audit Quality Center, which reflects its commitment to quality and continuing education in the ERISA audit field.