It’s useful to bear in mind that a benefit plan is considered a separate entity from your business. A quality audit helps you carry out your company’s responsibility to file a comprehensive and accurate annual return for each plan each calendar year.
Plan administrators bear the responsibility for making sure the plan’s financial statements are properly audited. Incomplete, erroneous and untimely audit reports may result in penalties against the plan administrator–failure to properly file in a timely manner can result in fines of $300 per day, and up to $30,000 each plan year. If your year-end is December 31, your Form 5500 and audited financial statement are due by July 31; the extended deadline is October 15. For year-end dates other than December 31, other dates apply. The DOL has the right to reject plan filings and assess penalties on plan administrators for deficient filings. The penalty for a missing auditor’s report or deficient filing is $150 per day, up to $50,000.
Beyond the fines, you could be jeopardizing the soundness of your plan to your employees. DOL studies of audit quality have identified significant deficiencies in audited plans. Your audits will help identify any weak spots in your internal controls that may affect your company’s overall ability to pay out benefits. Specifically, timely remittances of withheld contributions and ineligible participants receiving benefits.
If your company has a benefit plan, such as a 401(k) with 100 or more eligible participants, you are required to have an audit performed on that plan annually. Learn more about more about Employee Benefit Plan Audits in Skoda Minotti’s free e-book: What to Expect from Your First Employee Benefit Plan Audit.