audit process words This is the time of year that companies are finishing up their annual retirement plan audits. The filing of IRS Form 5500 is due on July 31 for plans with calendar year-ends.

In general, any retirement plan exceeding $250,000 in assets must file a 5500.  But how do you know when you are ready for a retirement plan audit?

With some exceptions, all retirement plans with 100 or more eligible participants at the beginning of a plan year require an annual audit.

Keep in mind that eligible participants aren’t just your employees who are actively participating.  It also includes eligible employees who don’t participate.  So, if you have 100 employees and only 50 of them are participating in the retirement plan, you still need an audit. Total participants also include people who have left the company but are still entitled to plan benefits and deceased individuals who have beneficiaries receiving benefits through the plan.

Once your plan reaches 100 eligible participants, an annual audit must be performed by a qualified third-party CPA firmlike Carpenter, Evert and Associates.  The results of the audit are included in your Form 5500 filing.

A retirement plan audit will look for assurance that certain requirements are met, including:

  • All employees have the same access to participation in the plan
  • Specific requirements of the plan are done in accordance with the written terms of the plan
  • The plan’s assets are valued accurately
  • Plan transactions are compliant with current laws

As you approach 100 plan participants, be aware that many variables can affect the need for a retirement plan audit, including participant exceptions, the 80/120 rule, and specifics of your company’s plan. A retirement plan audit expert at Carpenter, Evert and Associates can help you determine when you will need an annual audit and how to plan ahead for the process.

To contact a retirement plan audit specialist, Click Here or call us at (952) 831-0085.

For more information on filing your Form 5500, go to the IRS Form 5500 Corner.

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