Search
Close this search box.
Home / Articles / When do you need an audit?

When do you need an audit?

February 8, 2018

Share:

Knowing whether an audit is required for your benefit plan is a little like the story of Goldilocks – you need to figure out what number of participants is “just right.”

In general, an audit is required when an employer has a qualified benefit plan with more than 100 active participants at the beginning of the plan year.

Active participants include:

  • Eligible participants – those meeting eligibility requirements regardless of plan participation
  • Terminated and retired participants
  • Beneficiaries of deceased participants

Plans with more than 100 participants are usually considered large plans, while those with fewer than 100 are considered small plans. However, plans that fluctuate over and under 100 participants aren’t required to switch categories. This is called the 80-120 participant rule.

The categorization of “large” or “small” plan isn’t always set in stone. In fact, a plan sponsor has the ability to manage the number of plan participants. Certain plan provisions and hiring decisions can impact the categorization of the plan.

To learn more about aspects to consider when categorizing the size of your benefit plan, download our Buyer’s Guide.

 

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Guidance

Related Articles

Article

2 Min Read

SECURE 2.0 ACT: The Gift That Keeps on Giving

Article

2 Min Read

New FASB Standard Makes It Easier for Companies To Hold Crypto

Article

2 Min Read

Installment Sale 101: Is It Right for You?

Article

2 Min Read

Independent Contractor or Employee? DOL Issues New Rule

Article

2 Min Read

Four Tips to Help You Maximize QBI Deductions

Article

2 Min Read

QBI Deduction: Here Today and Gone Tomorrow?

Get in Touch.

What service are you looking for? We'll match you with an experienced advisor, who will help you find an effective and sustainable solution.

  • Hidden
  • This field is for validation purposes and should be left unchanged.