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Let’s first understand what is Employer Benefit Plan or 401 K Plan
EBP Auo Plan or 401 K plan. It’s retirement plan offered by Employer to employees and it is one of the most common ways people save for retirement is by contributing to a 401(k).
Basically the government allows companies to offer retirement savings accounts with certain tax advantages in an effort to encourage people to save for retirement.
The employer makes $ contribution to the plan as employee contributes and government has given some tax benefits so that employee can save for his future when he retires.
Why and when audit is necessary for EBP Plan or 401 K plan
Employer with more than 100 eligible employees participating on the first day of the plan year or 120 eligible participants if it’s not been audited.
The primary objective of an audit is to ensure the retirement plan you offer meets ERISA (Employee Retirement Income Security Act of 1974) standards and the specific requirements of your company’s 401(k) plan.
A plan is audited by independent auditor to check the plans are abiding by all rules and regulation by Federal and state government.
Which employees are eligible for 401 k plan?
IRS rules defines eligible employees as:
- Active employees
- Retired or separated employees
- Deceased
What Auditor will need at the time of audit
- Audit Information questionnaire
- Current year census
- Plan document, adoption agreement, and all amendments
- IRS determination letter or opinion letter
- Investment Committee meeting minutes
- Type 2 SOC 1 Report for third party service providers
- Summary plan description
- List of all parties in interest
- Discrimination tests
- Form 5500 with all supporting schedules
- Participant trial balance for the Plan year
- Distribution forms for selected distributions during the Plan year
How CRSP Can help Auditor in completion of EBP audit
CRSP Connect have qualified professionals who are well versed with EBP audit process, criteria, testing, regulations, reporting and financials need.
CPA can hire experienced and well versed EBP knowledge Offshore Audit staff from CRSP and they can lower the last minute burden or deadline.
Our well trained and experienced staff know exactly what CPA needs and how to finish audit in timely and efficient manner as they have knowledge of rules, byelaws, process, procedure and at top the software on which they have to finish the audit.
