By: William Bauder, CPA, CGMA, CITP, Manager

We perform audits of all types, including to the retirement plans offered by various companies and organizations. The retirement market in our country is forever growing and changing…in 2016 the U.S. employer sponsored retirement market topped out at over $25 trillion in assets.  If your company offers a plan and is part of this statistic, you should become familiar with the requirements for audit in this space.

Knowing the various audit requirements is the first step to determining what the future holds for your operation in regards to an audit. Let’s review some of the fact/requirements you should be aware of below:

·         Nearly all benefit plans are required to annually file form 5500 with the IRS. Your accountant or third party plan administrator should assist you with this process.

·         Depending upon how many participants are eligible for the plan (eligible, not participating in) you will either file the 5500 for a small plan or for a large plan.

·         If you are under 100 participants, you will generally file as a small plan, over 100 and you generally file as a large plan.

·         Once you plan has more than 120 eligible participants as of the first day of the plan year, you are required to file as a large plan.  This means a longer form 5500 and, as a requirement to the 5500, you must attach a copy of the plans audited financial statements.  Again, your accountant should be involved in this process.

·        Once you have filed as a large plan, in succeeding years you will follow last year’s filing unless, you go below 80 participants as of the first day of the plan year.  This is  known as the 80/120 rule.

These requirements apply to defined contribution plans, defined benefit plans, 401(k) plans, 403(b) plans, Employee Stock Ownership Plans, basically any plan that is required to file a form 5500 with the IRS.

Staying compliant in this space is key. Failing to file the proper forms… on time… could result in unwelcome penalties. Contact Holbrook & Manter today to start discussing you company’s retirement plan and audit needs. We look forward to assisting you.