Planning for your first retirement plan audit? Here is a helpful detailed timeline:

Six to twelve months before the audit:

• Engage an auditor
• Obtain an understanding of the responsibilities of the Plans service providers (recordkeeper, third-party administrator (TPA), recordkeeper, investment advisor) and their role in the audit
• Schedule the audit and submit authorization to the recordkeeper for the auditor to obtain necessary trust reports to prepare for the audit
• Review Plan documents to ensure all documents, amendments, and summary Plan descriptions (SPDs) are up to date and executed
• Conduct a self-audit to identify and address any issues (common examples are below)

Three to six months before the audit:

• Verify the Plan is operating according to the Plan document
• Complete census reporting so your TPA can complete the compliance testing
• Address any issues identified during the self-audit. Common issues include:
  • Missed employee contributions – employees that are eligible for contributions did not have an opportunity to contribute or employees elected to contribute to the Plan, but funds were not withheld from their pay
  • Late remittances - employee deferrals or loan repayments are not remitted to the Plan as soon as administratively possible
  • Noncompliance with the Plan document – this can include issues such as not following the stated definition of compensation, incorrect vesting, improper eligibility and improper loans and distributions
  • Errors in employer matching contribution calculations

One to three months before the audit:

• Ensure records are complete and organized
• Gather financial records as requested by the auditor, including financial data, payroll records, contribution details/reconciliation and the Plan documents previously reviewed
• Assign tasks to team members and identify the main contact with the auditor
• Confirm the audit date and expectations with the auditor

During the audit - Audits typically start May through July. The initial deadline for the filing of the audited statements for calendar year-ends attached to the Form 5500 is July 31^st but can be extended to October 15^th

• Provide the requested items to the auditor
• Be prepared for the auditors to request additional information after their review of the initial requested items. They will make requests of the Plan administrator and other team members, in addition to the recordkeeper and TPA.
• After all requests have been provided and inquiries addressed, the auditor will:
  • If engaged to prepare the Plan financial statements, provide a draft of the financial statements to be reviewed by the Plan Administrator or individual charged with governance over the Plan
  • Provide any required changes to the draft Form 5500 to the TPA
  • Provide a management representation letter for review and signature by the Plan Administrator or individual charged with governance over the Plan
  • Issue the final audited financial statements for your TPA to attach to the Form 5500 filing

Post-Audit, you will:

• Review findings and address auditor recommendations or deficiencies
• Make any necessary changes to processes or internal controls
• Work with your TPA to address any findings that require corrections to participant accounts

By planning ahead and staying organized, you can ensure a smooth retirement plan audit process and minimize potential compliance issues. Preparing for your first audit? We can help you navigate the process.