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Tips to Prepare for the Employee Benefit Plan Year-End Audit

September 01, 2017

Large employee benefit plans are required to have an audit conducted annually by an independent certified public accountant.  As part of the audit, the auditors review plan management’s compliance with certain laws and regulations.  Preparation for the audit can be cumbersome if you don’t know where to start.

This article provides a checklist of review procedures the plan sponsor should complete in order to fulfill and provide support of compliance with some of their fiduciary duties.  Completing these procedures will help your organization prepare for the employee benefit plan year-end audit, as well as provide strong fiduciary oversight.  This is not a comprehensive list, but rather a reminder of the more common areas which are often overlooked.


  • Perform a review of the census information to ensure it is accurate and complete.  Cross check with Third Party Administrator’s records.
  • Review the plan document to make sure the plan is operating in accordance with the written document.
  • Are deferrals calculated on compensation as defined in the plan document?
  • Are bonuses specifically included/excluded from deferrals per the plan document? 
  • Is the match calculated per pay period or on an annual basis?
  • Review the user controls specified in the custodian and third party administrator’s Service Auditor’s Report (SSAE16).
  • Review of terminated participant accounts—are mandatory distributions being made? 
  • Reconciliation of compliance testing data to payroll journals to ensure that testing is performed on accurate data, including compensation, deferral and match amounts.
  • Reconcile 1099s to the distribution report/trust report.
  • Reconcile the participant valuation summary report to the trust report.

Throughout the Year:

  • Maintain minutes for meetings with the board and third party advisors. Document the board’s review of the plan’s investments, including investment fees, in the minutes summary and any decisions regarding discretionary match and/or profit sharing.
  • Maintain copies of employee deferral change reports in company records.
  • For employees choosing not to defer, maintain a copy of the enrollment form with the election not to defer.
  • In addition to reviewing the payroll 401(k) contributions in total against data transferred to the third party administrator, spot check individual accounts to ensure amounts are properly allocated to the correct individual.
  • Utilize sign-offs on reports to formally document the review process.

Following this checklist will help ensure your organization is better prepared for your year-end employee benefit plan audit.


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