Understanding Employee Benefit Plan Audits | Evers Lopez Resources

As a business grows and begins offering retirement benefits like a 401(k), it becomes subject to a variety of regulatory responsibilities—one of the most significant being the employee benefit plan audit. For companies new to this requirement or looking to improve their current audit process, understanding what’s involved and why it matters is critical.

In this article, we’ll break down what an employee benefit plan audit is, who needs one, and how you can prepare.

What Is an Employee Benefit Plan Audit?

An employee benefit plan (EBP) audit is an independent review of a company’s retirement plan—typically a 401(k)—to ensure it complies with regulations set forth by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA).

The audit examines the plan’s financial statements, internal controls, and reporting practices to ensure that participant contributions are handled correctly, reported accurately, and in compliance with the plan document and applicable laws.

Who Needs an Audit?

For plan years beginning on or after January 1, 2023, the DOL updated its audit threshold:

You are required to undergo an audit if your plan has 100 or more participants with account balances as of the beginning of the plan year.

It’s important to note that this is not based on the number of eligible employees—but on those with active account balances.

Why the Audit Matters

While it may seem like a routine compliance task, an audit serves a much larger purpose:

✅ Protects employee assets

✅ Identifies internal control or operational issues

✅ Provides assurance to plan fiduciaries and participants

✅ Reduces risk of penalties or corrective actions from the DOL or IRS

Beyond meeting regulatory obligations, the audit also offers an opportunity to assess your plan’s administration and identify areas for improvement.

How to Prepare for an Audit

Preparation is key to a smooth and minimally disruptive audit. Here are a few proactive steps:

• Organize plan documentation:
  • Plan document and amendments
  • IRS determination letter
  • Summary Plan Descriptions (SPDs)
  • Prior year Form 5500
• Ensure payroll and plan data match:
  • Reconcile contributions and payroll reports to verify accuracy.
• Review service provider reports:
  • Confirm that record keepers, custodians, and TPAs have completed all required reporting.
• Communicate  internally:
  • Involve HR, finance, and payroll early in the process to avoid delays.

Final Thoughts

An employee benefit plan audit may be a regulatory requirement, but it doesn’t have to be a stressful experience. With the right preparation—and the right audit partner—it can be an opportunity to strengthen your plan’s administration and demonstrate your commitment to compliance and fiduciary responsibility.

Looking for a Pain-Free Plan Audit Experience?

At Evers Lopez, we’ve specialized in ERISA and DOL-mandated plan audits for over 25 years. We know how to make the process seamless so you can stay focused on running your business.

👉 Schedule a Consultation or Explore Our Retirement Plan Audit Services