Dallas 401(k) Auditing Firm

Audit requirements are based on the number of eligible plan participants. Eligible participants are at least 21 years old and have been employed in your business for at least one year.

The Department of Labor considers a 401(k) a “large plan” that requires an audit if it has had at least 100 participants since the beginning of the plan year. There are two exceptions to this requirement.

The first is what the DOL refers to as a “short plan year.” Even if a 401(k) plan is large, the business can opt to defer the audit to the following year if the current plan year is no more than seven months. If participation dwindles the following year — enough to reduce the 401(k) to a small plan — that first short plan year with at least 100 participants must still be audited.

The second exception is known as the 80/120 Participant Rule. If the number of eligible participants is somewhere between 80 and 120 at the start of the year, the audit requirement is the same as it was the previous year.

Let’s say there were 85 participants in the first year. That’s not enough to require an audit. In the second year, 110 employees participated. Although an audit would normally be required, the number of participants still doesn’t exceed 120. The business has the option of filing as a small plan again. If participation reaches at least 121 in the third year, a large plan audit is required.

Under the Employee Retirement Income Security Act of 1974, plan audits must be prepared by independent, certified public accountants. Audit findings are reported to the IRS and Department of Labor.

The 2020 deadline was July 31 unless you filed an extension that gives you until Oct. 15, and there are steep fines for filing late or turning in an error-ridden financial statement. Your business is in much better hands if your CPA firm has a proven track record that’s specific to 401(k) auditing.

If you like the idea of saving thousands of dollars on your audit, you’re in the right place. PriceKubecka’s flat fee of $7,000 falls well under the industry average in Dallas. In some cases, it’s not even half of what other accounting firms with less experience charge.

In firms that charge a flat fee, $11,000 to $15,000 or more is not unheard of, and those figures don’t include travel expenses. Here’s how the math breaks down in traditional 401(k) auditing costs:

• CPA hourly rate per auditor (usually two) × length of time to complete the audit (typically 80 hours).
• To that number, add expenses.
• To that number, add the salaries of the plan sponsor and one or more employees from human resources who assist and supply information.

Take loss of manpower into account as well. The employees who normally spend their time looking for ways to reduce costs and drive revenue will be tied up for at least one week.

There are numerous benefits to choosing PriceKubecka.

Our remote, streamlined audits typically take less than 40 hours. Our certified, experienced CPAs are members of the American Institute of Certified Public Accountants and the Employee Benefit Plan Audit Quality Center. We never use interns. There are no travel expenses and no extra fees. Our CPAs require no more than three hours of your employees’ time.

In short, our prompt, accurate audits could potentially save you tens of thousands of dollars in costs and penalties, dollars that would be infinitely more welcome on your bottom line.