If you offer your employees a 401(k), pension plan or other defined benefit plan, you may be required by law to have the plan audited on an annual basis. The U.S. Department of Labor (DOL) is diligent in making sure qualifying plans are audited, and in reviewing the audits to make sure the plans are being properly administered for the beneficiaries of your employees.
Failure to comply in a timely manner can be expensive. The DOL has issued fines of up to $1,100 per day for late submission of audited financial statements.
There is some confusion as to which plans must be audited. Generally, any company with 100 or more employees who are eligible to participate in a pension plan at the beginning of the year must have the plan audited, whether all employees participate or not. It is this last provision that can lead to uncertainty, as some companies mistakenly believe that the 100 employee trigger point applies only to participating employees. There is however an exception that often applies that allows you to avoid an audit if a company has fewer than 120 eligible employees.
If you do meet or exceed the 100 eligible employee plateau, and are subject to ERISA, you must file a Form 5500 with the IRS every year. An audited financial statement must accompany this form, which is due seven months after your company’s year-end. (An extension of up to 2.5 additional months may be granted.)
So if your year-end is December 31, your Form 5500 and audited financial statement are due by July 31. With an extension, you may have until October 15 to file. For year-end dates other than December 31, other due dates apply.
What exactly does it mean to be audited? Read the full article, “Do You Need to Audit Your Employee Benefits Plan.”