As a business owner, providing employee benefits such as a 401(k) audit plan can be a great way to attract and retain talented employees. However, as the plan grows in size and complexity, it becomes subject to federal regulations that require annual audits to ensure compliance. In this blog, we’ll discuss when your business should think about a 401(k) audit, specifically in the Houston area.
Firstly, it’s important to understand the basics of a 401(k) audit. The Employee Retirement Income Security Act (ERISA) requires that businesses with 100 or more eligible participants in their retirement plan conduct an annual audit. This audit must be performed by an independent auditor to ensure that the plan is being administered in compliance with ERISA regulations. However, even if your plan has fewer than 100 participants, you may still need an audit if your plan holds significant assets or if your business is publicly traded.
So when should your business think about a 401(k) audit?
The answer largely depends on the growth and complexity of your plan. For example, if your plan has grown to have 100 or more eligible participants, it’s important to begin thinking about an audit. However, it’s not just the number of participants that matters. If your plan holds significant assets, you may also need an audit. The threshold for requiring an audit based on assets is $250,000, but this number can vary based on certain circumstances.
It’s also important to consider any recent changes to your plan. If you’ve recently amended your plan, changed plan administrators, or had a significant turnover in plan participants, you may need an audit. Additionally, if your business is publicly traded, you’ll need an audit regardless of the size of your plan.
In the Houston area, many accounting firms specialize in 401(k) audits. It’s important to choose a firm that has experience with audits specific to employee benefit plans. This is because these audits require specialized knowledge and expertise to ensure compliance with ERISA regulations.
One such firm in Houston is SNTCPA. SNTCPA has years of experience providing 401(k) audits to businesses of all sizes and industries. Their team of experienced auditors is well-versed in the regulations surrounding employee benefit plans and is dedicated to ensuring that your plan complies.
If you’re unsure whether your business needs a 401(k) audit, it’s important to consult with an experienced accounting firm like ABC. They can help you understand the regulations surrounding employee benefit plans and determine whether an audit is necessary.
A 401(k) audit is an important step in ensuring that your plan is compliant with federal regulations and being administered effectively. If your business meets any of the criteria listed above, you should consider undergoing a 401(k) audit in Houston. By choosing an experienced and reputable auditor, you can help protect your business and your employees while ensuring the accuracy and efficiency of your 401(k) plan.
