Preparing for an employee benefit plan audit can feel daunting, but it can be done without disrupting day-to-day business responsibilities. With the right preparation and awareness of common challenges, plan administrators can reduce stress, ensure compliance and keep everything on track. 

Annual audits for plans with 100 or more participants with account balances are required under the Employee Retirement Income Security Act (ERISA) — and while this process helps protect employees’ retirement savings, it also supports fiduciaries by reducing the risk of Department of Labor (DOL) scrutiny or penalties. By approaching the audit with clarity and organization, administrators can make the process more efficient and manageable for both their teams and stakeholders.

FREQUENT AUDIT CHALLENGES TO WATCH FOR

Certain issues tend to surface repeatedly in employee benefit plan audits. Being aware of them early can help avoid last-minute surprises.

• Late remittance of employee contributions: Regulations require contributions to be deposited into the plan as soon as possible, and timeliness can help prevent noncompliance.
• Incomplete or inaccurate participant data: Gaps in hire dates, termination dates or compensation details can create significant reporting errors.
• Failure to follow the plan document: Whether related to loan provisions, vesting schedules or matching rules, auditors and regulators expect operations to align precisely with the written plan.
• Eligibility tracking errors: Missing or misapplying rules that govern when employees can enter the plan can lead to compliance issues.
• Untimely plan amendments: Delays in adopting legally required changes increase the risk of noncompliance for organizations.

For many plan administrators, the most stressful part is realizing these issues too late. Keeping them in mind upfront helps reduce the likelihood of unnecessary back-and-forth during the audit.

HOW TO MAKE AUDIT PREPARATION EASIER

As plan sponsors prepare for an employee benefit plan audit, they can prioritize reviewing and organizing participant census data to ensure accuracy and completeness. This stage also includes collecting core plan documents, including amendments, trust statements, payroll records and third-party administrator (TPA) reports. When planning for the audit, also compare daily operations to the terms outlined in the plan document and coordinate with payroll providers to confirm that contribution amounts are accurate and remitted promptly. Lastly, be sure to review findings from the prior year’s audit and correct issues before the current audit begins.

WHY PREPARATION PAYS OFF

When an employee benefit plan audit is well-prepared, organizations can reduce the risk of DOL scrutiny or penalties and enhance their credibility with employees and stakeholders. An audit is a necessary step to take towards compliance, but it is also an investment in an organization’s reputation.

MOVING FORWARD WITH CONFIDENCE

An audit is about more than meeting a regulatory requirement — it is an opportunity to strengthen trust, confirm accuracy and reinforce confidence among employees and leadership. By preparing early, addressing last year’s findings and keeping documentation organized, administrators can turn what often feels like a stressful exercise into a more straightforward, valuable process. With careful attention to detail and a proactive mindset, an employee benefit plan audit becomes not just a compliance necessity, but a step toward building long-term organizational resilience and credibility.

Not all auditors are qualified to perform employee benefit plan audits, so be sure to vet potential auditors for experience, resources and specialized knowledge. To learn more about the services at GHJ, reach out to its Employee Benefit Plan Audit Practice.