If more than 100 of your employees are participating in your company’s 401(k) plan, you may need an audit. (The Department of Labor requires one annually.) Facing an audit can feel overwhelming, especially if you’re new to the process. But with Mowery & Schoenfeld’s seasoned team on your side, you can relax because we’ll keep your annual audit smooth, on schedule, and painless. Let us handle the heavy lifting while you focus on what you do best.
401(k) Plan Audit Services
Make Your Employee Benefit Plan Audits Seamless and Compliant
What Is a 401(k) Plan Audit?
A 401(k) plan audit is an annual review of your retirement plan’s compliance with Department of Labor (DOL) and IRS rules, and verifying accuracy in financial reporting, participant records, and timely contribution deposits.
During the audit, our specially trained certified public accountants will review and test the plan’s administration, look at contributions, and check the timing of deposits, benefit payments, and participant loans, if applicable. Mowery & Schoenfeld’s auditors then help complete the plan’s financial statements and provide recommendations for improving the plan sponsor’s internal controls. Finally, our team offers feedback on the Form 5500 for timely filing with the regulatory agencies.
Why Choose Mowery & Schoenfeld as Your 401(k) Plan Auditor
The DOL encourages employers to pick an audit partner wisely. By choosing a skilled 401(k) plan auditor who follows the highest professional standards, you can protect your plan’s assets and stay on top of the Employee Retirement Income Security Act’s (ERISA) reporting and fiduciary rules. If the audit isn’t done properly, it can jeopardize plan assets and lead to civil penalties imposed by the DOL.
The DOL urges administrators to consider these factors, all of which Mowery & Schoenfeld provides:
- The number and type of 401(k) plans the CPA audits each year. Our team has decades of 401(k) audit Our services consist of both ERISA 103(a)(3)(C) and non-ERISA 103(a)(3)(C) (formerly known as limited scope and full scope) audits of defined contribution plans.
- The status of the CPA’s license with the applicable state board of accountancy. Our 401(k) plan audit partners and managers are all licensed CPAs within Illinois or Indiana.
- Whether the CPA has been the subject of any prior DOL findings or referrals or has been referred to a state board of accountancy or the AICPA for investigation. Mowery & Schoenfeld has never been the subject of any prior DOL findings or referrals and has not been referred to a state board of accountancy or the AICPA for investigation.
- The extent of specific annual training the CPA received in auditing 401(k) plans. Our audit team members each complete 40 hours of CPE (Continuing Professional Education) annually, with about 10 of those hours dedicated to plan audit quality and processes. Additionally, some members of our 401(k) plan audit team also attend the AICPA’s and Illinois CPA Society’s annual employee benefits conferences.
- Whether your CPA’s 401(k) plan audit work has recently been audited by another CPA, and whether that audit had a positive result. Mowery & Schoenfeld is a member of the AICPA’s Employee Benefit Plan Audit Quality Center, which requires peer review procedures every three years. Firms can receive a rating of “pass,” “pass with deficiency(ies),” or “fail.” Mowery & Schoenfeld’s most recent Peer Review Report, dated Jan. 17, 2024, received a “pass” rating.
Your 5-Step Path Through Our Employee Benefit Plan Audit Process
When you work with Mowery & Schoenfeld, we follow a structured audit process that makes the process seamless and keeps you compliant.
- Engagement planning and risk assessment: We start by getting to know your plan and spotting any risks, so we can focus on what matters most.
- Understanding internal controls and evaluating SOC 1 reports from third-party service providers: Next, we look at how your plan is managed and check reports from outside companies to make sure everything is running smoothly.
- Testing of plan transactions, contributions, distributions, and benefit payments: We dig into your plan’s activities like deposits, payments, and withdrawals to make sure they’re accurate and follow the rules.
- Financial statement preparation and management letter issuance: We help put together your plan’s financial statements and give you helpful feedback on what’s working well and what could be improved.
- Form 5500 review and coordination with plan administrators: We go over your Form 5500 and work with your team to make sure it’s ready and filed on time.
Audit types
Under ERISA Section 103(a)(3)(C), if your plan assets are held by a qualified financial institution, you have the option to choose an audit that lets your auditor rely on certified investment information. On the other hand, if your plan’s assets aren’t with a qualifying institution or you decide you want everything covered, you’ll need a full-scope audit instead.
Your Fiduciary Responsibility: Why EBP Audit Quality Protects Your Organization
Your business has fiduciary duties outlined under ERISA that require you to act in plan participants’ best interest. This extends to the selection and oversight of the plan’s independent auditor, making it even more important to work with an experienced team of plan auditors.
If an audit falls short, the consequences can be serious, from Department of Labor enforcement actions and IRS penalties to personal liability for plan sponsors, participant lawsuits, or even plan disqualification.
Mowery & Schoenfeld’s audit team gives you the expertise of experienced professionals with dedicated employee benefit plan training, so you can rest assured your plan is compliant and meets beneficiaries’ needs as your company grows.
ERISA Compliance and Correction Programs That Keep You Ahead of Enforcement
ERISA requires plan administrators to file an annual Form 5500 with the DOL, maintain plan documents, provide summary plan descriptions (SPDs) to participants, and follow specific rules for plan amendments, distributions, and fiduciary conduct. Failure to comply can result in IRS penalties of up to $250 per day (maximum $150,000) under IRC Section 6652(e), and DOL civil penalties of up to ~$2,670 per day (inflation-adjusted) under ERISA Section 502(c)(2)
Finding compliance issues during an audit gives you have an opportunity to make corrections through the IRS Employee Plans Compliance Resolution System (EPCRS) and the DOL’s Voluntary Fiduciary Correction Program (VFCP) and Delinquent Filer Voluntary Compliance Program (DFVCP).
These structured pathways let you correct errors before they trigger enforcement action. Our audit approach identifies compliance gaps early and connects you with actionable steps to get your plan back on track.