401k and ERISA

Employee Benefit Plan: Audits, Compliance and Financial Reporting

Employers institute employee benefit plans for many reasons, but the most fundamental is to incentivize their most important asset – the enterprises's human capital. However, the establishment and ongoing maintenance of a qualified plan requires the plan sponsor comply with the requirements of the Employee Retirement Security Act ("ERISA") and generally, Federal law requires that employee benefit plans with 100 or more participants have the plan audited as part of the employer's obligation to file an annual return/report (Form 5500). Employee Benefit Plans include 401(k) Plans, Profit Sharing Plans, Defined Benefit Plans, Health and Welfare Benefit Plans and Stock Bonus Plans, among others.

Your plan needs an experienced auditor who can help you protect the financial integrity of your plan because an incomplete, inadequate or untimely audit report may result in penalties being assessed against the plan administrator. The Department of Labor ("DOL") publication on selecting an auditor states, "One of the most common reasons for deficient accountants' reports is the failure of the auditor to perform tests in areas unique to employee benefit plan audits. The more training and experience that an auditor has with employee benefit plan audits, the more familiar the auditor will be with benefit plan practices and operations, as well as the special auditing standards and rules that apply to such plans." Accordingly, in selecting an auditor for your plan ensure they have not only experience in performing plan audits but that they fulfill the necessary audit procedures for a quality audit.

Whether the plan is a 401(k), an employee stock ownership plan (ESOP), a profit sharing plan, or a traditional defined benefit retirement or health plan, RDF’s professionals have significant experience auditing each of these plan types, and have been performing plan audits for over 15 years. Please contact Lew Finkelstein for further information about how RDF can work with your Plan to ensure not only its success, but its compliance with the many requirements established by the DOL and ERISA.

Useful Links:

Employee Benefits Security Administration

Pensys Inc

Internal Revenue Service