The 401(k) audit is a necessary compliance concern in organizations. Specifically, if your company offers a 401(k), you are obligated to conduct periodic audits as well! However, an audit is not an easy undertaking. It requires the usage and coordination of many, many documents…
Worry not! Professional Houston 401k audit services handle any and all document-related work for you! CPAs are well aware of where and how a certain document might be available. As such, they can help make the process of retrieving the following documents easier…
1. Executed Plan Documents
Executed plan documents are the foundational legal documents of a 401(k) plan. These documents include the formal plan document, the trust agreement, and any amendments made to the plan over time. The plan document outlines the rules and procedures governing the 401(k) plan, including eligibility requirements, contribution limits, and distribution rules. These documents must accurately reflect the plan’s operations and align with the actual practices of the business.
2. Current IRS Determination Letter
The IRS determination letter is a crucial document that certifies the tax-qualified status of the 401(k) plan. This letter confirms that the plan meets all the requirements for tax benefits under the Internal Revenue Code. CPAs refer to the current IRS determination letter to ensure that the plan’s tax status remains valid and that no changes have affected its qualification. If the business has made amendments to the plan, it is important that the plan’s qualification status is re-evaluated and updated if necessary.
3. Executed Retirement Plan Administrative Committee Minutes
The retirement plan administrative committee is responsible for overseeing the plan’s operation, making key decisions, and ensuring compliance with applicable laws. Minutes from the committee’s meetings provide a record of decisions made and actions taken regarding the plan. CPAs review these minutes to assess how decisions are being documented and whether they align with the plan’s terms and regulatory requirements.
4. Current and Previous Summary Plan Descriptions
Summary Plan Descriptions (SPDs) are required documents that provide plan participants with a clear and concise overview of the 401(k) plan’s benefits, rights, and responsibilities. CPAs review both the current SPD and previous versions to verify that the information provided to employees is accurate and up-to-date. Comparing current and previous SPDs helps CPAs ensure that any changes to the plan are properly communicated to participants and that the plan’s description is consistent with its actual provisions.
5. Previous Form 5500s Filed with the DOL
Form 5500 is an annual report that provides information about the plan’s financial condition, investments, and operations. Businesses are required to file this form with the Department of Labor (DOL) each year. CPAs review previous Form 5500 filings to assess the accuracy of reported financial information and ensure that the plan has been compliant with reporting requirements over time.
6. Prior Years’ Audited Financial Statements
Audited financial statements from prior years provide a comprehensive review of the plan’s financial activities, including contributions, investments, and distributions. These statements are essential for understanding the financial health of the 401(k) plan and ensuring consistency in reporting. By examining prior years’ audited financial statements, CPAs can compare historical data, identify any anomalies, and ensure that financial practices have remained consistent and compliant with regulations.
These documents are the cornerstone of any comprehensive 401(k) audit. Most importantly – they provide a complete picture of how this plan is working out for your organization and employees. The insights generated here can help rectify errors, catch fraud, and simply streamline the entire process!
So don’t wait – reach out to an expert CPA for an audit today!