When is a 401(k) plan audit required?

Generally, a plan audit is required when a plan has 100 or more participants on the first day of the plan year (typically, January 1).  

“Participants” who must be included in the count include individuals:

  • Eligible to participate and enrolled in the plan;
  • Eligible to participate, but not enrolled in the plan; and
  • Participants who have terminated employment with a remaining vested balance in the plan.

However, there is an exemption to the 100 participant count (the “80-120 Participant Rule”). This exemption allows waiver of the audit if your company filed a 5500-Short Form (SF) the previous plan year and the participant count does not exceed 120 at the beginning of the subsequent plan year. Learn more here.

Was this article helpful?
Have more questions? Submit a request