Employee benefit plans have their own set of complex laws and regulations. But did you know that even small plans can be subject to audits?
Generally, if you have 100 eligible participants in your plan at the start of the year, your plan will require an audit. Note that this number includes all participants who are eligible—not just those who are enrolled.
If you filed as a 'small plan' last year and the number of participants in your plan is fewer than 121 at the beginning of this plan year, you may continue to file as a small plan under the 80-120 Participant Rule. This rule allows plans with between 80 and 120 participants at the beginning of a plan year to file in the same category as the previous year.
Many small businesses downplay employee benefit plan audits. However, failing to file, or filing late or incorrectly, can have serious repercussions. Here's what you should know:
Your CPA can help you determine if your employee benefit plan meets the criteria for an annual audit, suggest ways to avoid penalties, and ensure that your audit meets all requirements. If you have any questions about employee benefit plan audits, leave a comment below, or feel free to contact me directly anytime.