Employee Benefit Plan Refresher
Well it’s that time of year again…time to dust off those participant files and prepare for the employee benefit plan audit season. Many of you may be thinking, employee benefit plan audit? Does OUR plan need an audit? Generally speaking, many plans qualify as a small plan by having fewer than 100 participants. Additionally, a plan could have been filed as a small plan in the previous year and had no more than 120 participants at the beginning of the current plan year. In those cases, the plan is exempt from the audit requirement. If your plan has met the conditions for exemption from the audit requirement in previous years, but the number of participants has been steadily increasing, it may be time to consider preparing for the inevitable audit.
Here are a few tips for making that first-year audit transition a little smoother:
- Organize the employee files:
- Do they contain proper documentation for verification of benefit eligibility/ineligibility?
- Are signed participant forms (i.e. enrollment, beneficiary designation, investment allocation, etc.) contained within?
- Have plan documents readily accessible. Some documents that might be required include:
- Signed adoption agreements
- Signed amendments
- Signed service provider agreements
- Summary plan description
- Current surety/fidelity bond
- Revisit the plan document to ensure the plan is operating in accordance with the provisions contained therein.
- If your plan is an ESOP, consider reviewing the allocation calculation spreadsheet for clarity.
- For plans utilizing online services through the third-party administrator’s website, review information provided and speak to your customer service representative to ensure documentation for participant-initiated transactions such as loan/disbursement requests, allocation changes or deferral changes, is available and easily accessible.
- Gather participant and plan-wide information (plan investment balances and activity) for prior plan years.
Taking some time to organize and prepare for that first-year audit now will be well worth the effort when audit time comes. If you have any questions or concerns about preparing for an employee benefit plan audit, please feel free to contact us.
Note: For a full discussion on the audit waiver, please visit the Department of Labor’s website by clicking here.