401K (Employee Benefit) Retirement Plans and Audits

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401k Audit is no less an exception which is complex for the people who are not familiar with it. Federal Government has stated some rules and regulations that are mandatory for both 401k plans, other retirement plans, and employer as well.

The word “audit” whenever cited; raises questions and discomfort among people. The reason being; lesser knowledge of the audits which they are obliged to pay and which one doesn’t concern them. 401k Plan Audit is no less an exception which is complex for the people who are not familiar with it.

A lot of non-public businesses are not indebted to audit their book annually. While figuring out if you are bound to pay for your 401k plan audit; primary requirement is to determine the number of eligible participants in the plan at the outset of the plan year. Such plans are termed “Large Plan.”ERISA (Employee Retirement Income Security Act) of 1974 obligates a firm to have their financial statement’s annual audit attached to their Form 5500 through an independent qualified CPA to DOL.

When an employee meets the requirements mentioned in the plan documents i.e. 401k or profit sharing plan then only they are entitled to receive the benefits. The requirements of an employee are which might be less prohibitive:

Minimum age of 21

Minimum service year of 1

403(b) plan gives the power of “universal availability” to an employer where if you defer an employee’s income, it’s mandatory to provide the same endeavor to every employee.

But some exceptional employees exist in this plan; that are excluded, such as the employees who annually share $200 or less, have weekly working hours less than 20 and are the students who provide services under Internal Revenue Code Section 3121(b) (10). Along with this, non-resident employees and the ones taking part in 401k, 403 b or 457b plan are also excluded.

80-120 Participant Rule: This rule lets the organization with participants between 80 and 120 since the first day of the plan year, to be filed under the same category. Whether a plan comes under a large plan or a small plan, depends on the strength of the participants.

SEC is diligent to demand a form to be filed by the plans that involve the stock purchase, savings and related plans having securities that are registered under the Securities Act 1933. The form i.e. to be filed is 11-K which is applicable to Section 15(d) of Securities Exchange Act 1934.

In spite of the fact that while filing for SEC rules, PCAOB standards audit a plan; to file with the DOL, the firm is also obliged to audit in compliance with GAAS (Generally Accepted Auditing Standards).



Source by Daryl Joyce

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