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EBP Audit: What it is, When You Need One, How to Get it Right

If your company offers a 401(k), 403(b), or other employee benefit plan, there’s a point where compliance stops being optional—and an audit becomes mandatory.

Yet most plan sponsors don’t fully understand what an employee benefit plan (EBP) audit involves, when it’s required, or how to choose the right CPA firm.

This guide breaks it all down—clearly, quickly, and without the fluff.

What is an EBP Audit?

An employee benefit plan audit is a CPA-led review required for certain retirement plans to verify financial accuracy, participant data, and compliance with ERISA and DOL regulations.

The goal:
👉 Ensure your plan is operating correctly
👉 Identify compliance issues early
👉 Confirm accurate reporting on Form 5500

    When Do You Need an EBP Audit?

    You generally need an audit when your plan reaches: 100+ eligible participants at the beginning of the plan year. This is known as the “large plan” threshold under DOL rules.

    Key nuances:

    • Based on eligible, not participating employees
    • Includes terminated employees with balances
    • The 80-120 participant rule may allow flexibility year-to-year

    Bottom line:
    If you’re near 100 participants, you should already be planning for an audit.

    What Does an EBP Audit Cover?

    A high-quality EBP audit examines:

    Participant Data

    • Eligibility
    • Contributions (employee + employer)
    • Allocation accuracy

    Plan Operations

    • Are you following your plan document?
    • Loan provisions, distributions, vesting rules

    Financial Reporting

    • Accuracy of financial statements
    • Tie-out to Form 5500

      Contributions & Deposits

      • Timing of deposits (DOL is strict here)
      • Late contributions and potential prohibited transactions

      Investments

      • Valuation
      • Participant allocations
      • Reconciliation to trust reports

          What Is the EBP Audit Process? (High-Level)

          While every firm differs, a streamlined audit typically follows:

          1. Planning & Request List
          • Initial document request (participant data, trust reports, plan docs)
          1. Data Testing
          • Contributions, distributions, loans, eligibility
          1. Compliance Testing
          • ERISA and plan provision adherence
          1. Issue Identification
          • Errors flagged early (not at the last minute)
          1. Financial Statement Preparation
          • Draft audit report + financials
          1. Final Review & Filing Support
          • Coordination with Form 5500 filing

          Important EBP Audit Deadlines

          Missing these can get expensive—fast.

          Key dates:

          • Plan year-end: Typically December 31
          • Form 5500 due date: July 31
          • Extended deadline (with Form 5558): October 15

          What Happens If You Don’t Complete an Audit?

          The penalties are severe:

          Failing to complete a required EBP audit can result in daily penalties from the DOL, IRS fines, and increased regulatory scrutiny.

          How to Find the Right EBP Auditor

          Not all CPA firms are built for EBP audits. Look for:

          • Specialization in employee benefit plan audits
          • Experience with your plan size and complexity
          • Clear, predictable pricing (avoid scope creep)
          • A defined, repeatable audit process

          Questions to Ask an EBP Auditor

          Before hiring, ask:

          • How many EBP audits do you perform annually?
          • Do you use full-population testing or sampling?
          • What’s the expected time commitment from our team?
          • How do you handle late contributions or errors?
          • What’s included in your fee?

          Red Flags to Watch Out For

          Avoid firms that:

          🚩 Treat EBP audits as a side service
          🚩 Have unclear or hourly-based pricing
          🚩 Require 10–20+ hours of your team’s time
          🚩 Communicate issues late in the process
          🚩 Rely heavily on junior staff with little oversight

          These are the firms that lead to delays, scope creep, and increased compliance risk.

          Why Specialization Matters (More Than You Think)

          According to DOL findings, a significant percentage of EBP audits contain major deficiencies. Why? Because many firms:

          • Don’t fully understand ERISA nuances
          • Apply generic audit approaches
          • Miss plan-specific compliance issues

          A specialized firm reduces risk, time, cost, and stress for everyone involved in a 401(k) audit.

          PriceKubecka: A Better EBP Audit Experience

          At PriceKubecka, we’ve reengineered the audit process specifically for plan sponsors. Here’s what makes us different:

          We deliver high-quality audit rigor without the big-firm price—or the low-cost shortcuts.

          👉 Talk to PriceKubecka today and see how a modern, specialized EBP audit should work.

          Frequently Asked Questions

          What triggers a 401(k) audit requirement?

          A 401(k) audit is required when a plan has 100 or more eligible participants at the start of the plan year.

          How much does an employee benefit plan audit cost?

          PriceKubecka offers flat-rate 401(k) audit pricing starting at $12,000. This is typically less than half the cost of a traditional audit, with no travel expenses or hourly billing surprises. Additional charges may apply for plan mergers, terminations, or operational defects discovered during the audit.

          How long does an EBP audit take?

          Most audits take several weeks, but a streamlined process can significantly reduce disruption and time commitment.

          How much time does a plan sponsor need to spend on an audit?

          Traditional audits may require 10–20+ hours, but optimized processes can reduce this to under 5 hours.

          What makes PriceKubecka different from other 401(k) auditors?
          PriceKubecka is among the top 1% of CPA firms nationally by 401(k) audit volume. Three key differentiators: (1) proprietary technology that automates 90% of the audit, (2) a flat-rate fee starting at $12,000 with no surprises, and (3) a comprehensive approach that reviews ALL payroll data rather than just a sample, catching errors other auditors miss.
          Does a Fiscal-Year 401(k) Plan Still Need an Audit?

          Potentially, yes.

          Operating on a fiscal year does not eliminate or change the basic requirement for an independent employee benefit plan audit. Whether a defined contribution plan requires an audit generally depends on its Form 5500 filing status and the applicable participant-count rules—not whether its plan year ends December 31.

          For defined contribution plans, the relevant participant count now focuses on participants and beneficiaries who have account balances at the beginning of the plan year, rather than everyone merely eligible to participate.

          So an off-cycle plan sponsor should answer two separate questions:

          Do we have an audit requirement?

          And, if so:

          When must that audit be completed so our Form 5500 can be filed on time?

          Those are related questions, but they aren’t the same question.

          When Should a Fiscal-Year 401(k) Audit Start?

          The Form 5500 deadline should be the end of your audit timeline—not the beginning of it. The safest approach is to work backward from your actual filing deadline and establish the audit schedule well in advance.

          If an independent audit is required, the auditor’s report generally accompanies the Form 5500 filing. That means the audit needs to be substantially complete before your filing deadline arrives.

          There isn’t one audit-start date that works for every plan. The amount of time needed depends on factors such as plan size, the availability of records, the complexity of the plan and whether testing identifies issues requiring follow-up.

          A practical timeline should allow time for:

          Data collection: Your team may need to gather census information, payroll data, contribution records, recordkeeper reports, participant files and plan documents.

          Audit testing: Your auditor will perform required procedures and may select participants or transactions for additional documentation.

          Follow-up questions: Missing information and discrepancies often require responses from HR, payroll, the recordkeeper, TPA or other providers.

          Resolving exceptions: Eligibility errors, contribution discrepancies, participant loans, distributions, compensation issues and other findings can require additional investigation.

          Final review and issuance: The audit team still needs time to complete its review and issue the auditor’s report before the Form 5500 is finalized.

          Example: A 401(k) Plan With a March 31 Year-End

          Suppose your plan year ends March 31.

          Your normal Form 5500 deadline is generally October 31.

          With a timely Form 5558 extension, the deadline can generally be extended to January 15.

          That does not mean January should become your target date for beginning the audit.

          Instead, the plan sponsor and auditor should establish a timeline that leaves enough time before the applicable deadline to obtain records, complete testing and address any unexpected issues.

          In other words:

          March 31 plan year-end → October 31 normal deadline → January 15 extended deadline

          Your audit calendar should be built backward from whichever filing deadline applies.

          Example: A 401(k) Plan With a June 30 Year-End

          A June 30 plan operates on a very different schedule.

          Its Form 5500 would generally be due January 31 of the following year.

          With a timely Form 5558 extension, the deadline would generally move to April 15.

          For that employer, traditional summer 401(k) “audit season” may be largely irrelevant. Its audit preparation and testing may instead take place during the fall and winter.

          That is why a plan with a non-calendar-year end should work with an auditor that maintains employee benefit plan audit capabilities throughout the year.

          What Can Delay an Off-Cycle 401(k) Audit?

          Having a different deadline doesn’t protect a plan from the same issues that slow down calendar-year audits.

          Some common audit roadblocks include:

          • Missing or inaccurate census information
          • Eligibility and plan entry-date errors
          • Incorrect employer contribution or match calculations
          • Incorrect application of the plan’s compensation definition
          • Late participant contributions
          • Participant loan problems
          • Vesting or forfeiture discrepancies
          • Distribution documentation issues
          • Differences between payroll and recordkeeper data
          • Delays obtaining information from outside service providers

          One of the advantages of starting early is having time to resolve those issues before they become filing-deadline problems.

          What If Your Fiscal-Year Form 5500 Deadline Falls on a Weekend or Holiday?

          There is an important exception to the dates in the chart.

          If a Form 5500 filing deadline falls on a Saturday, Sunday or federal holiday, the filing can generally be made on the next day that is not a Saturday, Sunday or federal holiday. U.S. Department of Labor

          That means sponsors should verify the precise deadline for the applicable filing year rather than relying solely on a recurring calendar.

          The month-by-month chart is best used as a planning guide.

          What About Short Plan Years?

          A short plan year can occur when, for example, a plan changes its plan-year end or terminates and completes the distribution of plan assets.

          The general Form 5500 timing rule still applies: the filing is generally due by the last day of the seventh calendar month after the short plan year ends, subject to an authorized extension. U.S. Department of Labor

          Short plan years can introduce additional reporting and audit considerations, so sponsors should coordinate the filing timeline with their TPA, auditor and other advisors rather than assuming the normal annual schedule applies.

          Don’t Build Your Audit Around October 15 If October 15 Isn’t Your Deadline

          October 15 gets enormous attention in the 401(k) industry because it is the extended Form 5500 deadline for many calendar-year plans.

          But it’s only one deadline.

          For a non-calendar-year plan, your filing date could fall in January, April, June, November—or virtually any other month.

          Your audit calendar should therefore begin with three questions:

          When does our 401(k) plan year end?

          When is our Form 5500 due?

          When does the audit need to begin to comfortably meet that deadline?

          Once those dates are established, your organization can build a recurring compliance calendar around its own plan rather than someone else’s audit season.

          Looking for a 401(k) Auditor for a Fiscal-Year Plan?

          PriceKubecka performs employee benefit plan audits throughout the year for both calendar-year and non-calendar-year 401(k) plans.

          Our employee benefit plan specialists perform more than 400 EBP audits annually, including 401(k), 403(b) and ESOP audits. Because employee benefit plan auditing is a significant part of our audit practice, we can work with plan sponsors whose audit and Form 5500 deadlines fall throughout the year.

          Whether your plan ends March 31, June 30, September 30 or another date, your audit should be built around your plan year and your deadline.

          [Talk to a 401(k) Auditor]

          Example: A 401(k) Plan With a March 31 Year-End

          Suppose your plan year ends March 31. Your normal Form 5500 deadline is generally October 31.

          With a timely Form 5558 extension, the deadline can generally be extended to January 15.

          That does not mean January should become your target date for beginning the audit.

          Instead, the plan sponsor and auditor should establish a timeline that leaves enough time before the applicable deadline to obtain records, complete testing and address any unexpected issues.

          In other words:

          March 31 plan year-end → October 31 normal deadline → January 15 extended deadline

          Example: A 401(k) Plan With a June 30 Year-End

          A June 30 plan operates on a very different schedule.

          This plan’s Form 5500 would generally be due January 31 of the following year. With a timely Form 5558 extension, the deadline would generally move to April 15.

          For that employer, traditional summer 401(k) “audit season” may be largely irrelevant. Its audit prep and testing may instead take place during the fall and winter.

          That’s why a plan with a non-calendar-year end should work with an auditor that maintains EBP audit capabilities throughout the year.

          In other words:

          June 30 plan year-end → January 31 normal deadline → April 15 extended deadline

          What Can Delay an Off-Cycle 401(k) Audit?

          Having a different deadline doesn’t protect a plan from the same issues that slow down calendar-year audits. Some common audit roadblocks include:

          • Missing or inaccurate census information
          • Eligibility and plan entry-date errors
          • Incorrect employer contribution or match calculations
          • Incorrect application of the plan’s compensation definition
          • Late participant contributions
          • Participant loan problems
          • Vesting or forfeiture discrepancies
          • Distribution documentation issues
          • Differences between payroll and recordkeeper data
          • Delays obtaining information from outside service providers

          One of the advantages of starting early is having time to resolve those issues before they become filing-deadline problems.

          What If Your Fiscal-Year Form 5500 Deadline Falls on a Weekend or Holiday?

          There is an important exception to the dates in the chart. If a Form 5500 filing deadline falls on a Saturday, Sunday or federal holiday, the filing can generally be made on the next day that is not a Saturday, Sunday, or federal holiday. 

          That means sponsors should verify the precise deadline for the applicable filing year rather than relying solely on a recurring calendar. The month-by-month chart is best used as a planning guide.

          What About Short Plan Years?

          A short plan year can occur when, for example, a plan changes its plan-year end or terminates and completes the distribution of plan assets.

          In this case, the general Form 5500 timing rule still applies: the filing is generally due by the last day of the seventh calendar month after the short plan year ends, subject to an authorized extension. 

          Short plan years can introduce additional reporting and audit considerations, so sponsors should coordinate the filing timeline with their TPA, auditor, and other advisors rather than assuming the normal annual schedule applies.

          Don’t Build Your Audit Around October 15 if it isn’t Your Deadline

          October 15 gets enormous attention in the 401(k) industry because it is the extended Form 5500 deadline for many calendar-year plans. But it’s only one deadline.

          For a non-calendar-year plan, your filing date could fall in January, April, June, November—or virtually any other month. Your audit calendar should therefore begin with three questions:

          1. When does our 401(k) plan year end?
          2. When is our Form 5500 due?
          3. When does the audit need to begin to comfortably meet that deadline?

          Once those dates are established, your organization can build a recurring compliance calendar around its own plan rather than someone else’s audit season.

          Looking for a 401(k) Auditor for a Fiscal-Year Plan?

          PriceKubecka performs employee benefit plan audits throughout the year for both calendar-year and non-calendar-year 401(k) plans.

          Our EBP specialists perform more than 400 audits annually, including 401(k), 403(b) and ESOP audits. Because employee benefit plan auditing is a significant part of our audit practice, we can work with plan sponsors whose audit and Form 5500 deadlines fall throughout the year.

          Whether your plan ends March 31, June 30, September 30, or another date, your audit should be built around your plan year and your deadline.

          [Talk to a 401(k) Auditor]

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